With a technique called digital sampling, the sound of slamming of a car door or a dog barking can be turned into music that can be played at any pitch. These sounds are captured and stored as numerical values on floppy disks; to clone sounds, the sampler merely recalculates the number of values. Flip a switch and you can “sample” patches of existing recordings. If you don’t like it as a violin, punch a key and it’s a saxophone. If you want to see it as sheet music, print it with a personal computer. Sampling has always remained an evident phenomenon in the musical fraternity.

In the earliest days, sampling was an underground phenomenon. The only people who used the technique made very little money and received almost no mainstream attention. As such sampling artists were completely ignored by the music industry.

By the mid-1980s, rap music was burgeoning and samplers still remained inexpensive, but only when rap became a profitable musical genre, did the artists of the original musical piece begin to take legal action and suing samplers for copyright infringement.

Legislation:

Sampling music has always been a contentious issue in copyright law because under 17 U.S.C. § 114(b) of the U.S Copyright Act, recording copyright owners are only given the right “to duplicate the sound recording,” whereas other tangible forms of expression like books, movies and musical compositions enjoy a broader range of copyright protection from reproduction or imitation of significant aspects of the works, such as copying a plot, memorable characters, or a melody.

Licensing can render sampling legal:

However, under the compulsory licensing policy of the U.S Copyright Law there is a provision that allows a person to distribute a new sound recording of a musical work, if that has been previously distributed to the public, by or under the authority of the copyright owner, and there is no requirement that the new recording be identical to the previous work, as the compulsory license includes the privilege of rearranging the work to conform it to the recording artist’s interpretation.

This privilege is granted only when the sampling artists have paid a certain sum of royalty to the original artists in order to render their work legal.

But in order to avoid the payment of heavy royalties the samplers undertake unauthorized fixation of their work regardless of the stringent copyright policies subsisting in the U.S.

Renowned Samples:

Sampling can be traced back as far as 1961, when James Tenney created Collage #1 “Blue Suede” from samples of Elvis Presley’s recording of the song “Blue Suede Shoes.”

The Beatles also used the technique on a number of popular recordings which include “Yellow Submarine”, “Revolution 9” and “I Am the Walrus”.

Timothy Leary also sampled The Beatles and the Rolling Stones on his album “You Can Be Anyone This Time Around” in 1970.

Sampling norm in popular music which consisted of live studio bands did not back up with much popularity, but the sampling industry really blossomed when the Hip-Hop producers pioneered with their rap records.

Earliest examples of this practice includes Grandmaster Flash’s- The Adventures of Grandmaster Flash on the wheels of steel sampled with “Apache” break by the “Incredible Bongo Band”; Brother D and the Collective Effort’s “How We Gonna Make The Black Nation Rise” which sampled the beat and bass-line from Cheryl Lynn’s 1978 hit “Got To Be Real”.

In the early 1980s, the album by David Byrne and Brian Eno “My Life in the Bush of Ghosts” used sampling extensively for the songs’ vocals.

“Vanilla Ice” sampled the bass-line of 1981 song ‘Under Pressure” by Queen and David Bowie for his 1990 single “Ice Ice Baby”. Freddy Mercury and David Bowie did not receive any credit or royalties for the sample. But Van Winkle later gave them song-writing credit.

Defenses which pull through these samples:

The samplers generally sought to two defenses in order to save their samples. First is the defense of fair use and the second being the doctrine of de minimis usage.

The fair use doctrine is generally directed to works which are non-commercial. Mostly, the copyrighted works which are used for educational purposes, research, news reporting and reviewing can claim fair use defense. There are four rules laid down in the section 107 of the U.S. Copyright law which are the limitations on the copyright law:

• • The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes
  • The nature of the copyrighted work
  • The amount and substantiality of the portion used in relation to the copyrighted work as a whole
  • The effect of the use upon the potential market for, or value of, the copyrighted work

The second defense, namely the principal of de minimis usage can be applied in cases where the changes are minimal and there is no evidence of substantial similarity. Generally the works which subsist in the public domain can be utilized to a certain extent, which would fall under the ambit of de minimis usage.

Samples which survived and those which didn’t:

U.S Federal court over-ruling in the case of Biz Markie’s album “I Need a Haircut” which used sample from Gilbert O’Sullivan’s “Alone Alone Again” sought a preliminary injunction against defendants for the improper and unlicensed use of the song, “Alone Again (Naturally).” Defendants’ album contained a rap recording entitled “Alone Again,” which used three words from plaintiff’s song and a portion of the music taken from the original recording. In making a determination, the court was required to determine the owner of the copyrights to the original song and to the master recording made by the original artist.

The court determined that plaintiff was the true owner of the copyrights because original copyrights were deeded to plaintiff, the original artist testified that plaintiff was the owner of the copyrights, and defendants had contacted plaintiff to obtain a license before the release of the album. Since defendants violated plaintiff’s rights intentionally, the court granted injunctive relief and referred the matter to a United States Attorney to consider criminal prosecution.

The case led to legal concerns in the music industry in relation to the sampling artists. This gave them an impetus to attract more samplers due to the heavy compensation they got in return.

In 1997, Verve released its hit single “Bitter Sweet Symphony”. The song used an inverted sample from the obscure orchestral tribute to the Rolling Stones the last time for its hook. The Verve could actually ask verbal permission to use the sample, but they were sued anyway for using too much of it. Their song “Bitter Sweet Symphony” leans heavily on the sample, but it also featured completely original structure and instrument nonetheless, the band was successfully sued by the Rolling Stones. They lost all profits to the band and were denied of song-writing credit even though they had nothing to do with the recording.

D.J Danger Mouse cut up samples for their “Grey Album” from The Beatles celebrated “The White Album” and from the American rapper Jay-Z’s “Black Album”. EMI who held copyright to The Beatles recordings immediately filed injunction to prevent distribution. The pace of the album’s enormous popularity invited critical acclaim.

In Bridgeport Music Inc. v. Dimension Films the specific copyrighted recording was a three-note combination from a solo guitar. There was no dispute that the filmmaker’s recording of a rap song contained a sample of that guitar solo. The trial court used a de minimis analysis to determine that the sampling did not rise to the level of a legally cognizable appropriation. On review, the court reversed on the ground that no de minimis inquiry was necessary where the filmmaker did not dispute that it digitally sampled a copyrighted sound recording. Where there was no authorization, infringement was established.

It also made clear that its ruling applied only to digital sampling of sound recordings protected by valid copyrights.

Conclusion:

Not all legally sampled songs are universally acclaimed.

Sampling has been widely derided as highly ‘derivative riding’ on the catchiness of music sample instead of original creativity. All the same to broadly condemn the practice would be to suppress vibrant and colorful bane of creativity in today’s music culture. Indeed it seems to run contrary to the very purpose of copyright law.

Goal of copyright law is essentially to encourage creativity. In order to do that, they must offer incentives to artists to create new work. If an artist is given no legal control over what they have created then their work is instantly devalued because they can be distributed and used freely by anyone anywhere.

Obviously this is problematic and no artist would ever be able to profit of their work. On the other hand artists cannot be given absolute control over their output as this would prevent anybody from using their work for discourse or criticism or supplementation. Law should provide artists with tough control to compel the creation of new works but not so much to suppress the creation of new created works.

Introduction

The abortion laws in India have once again come to limelight with a three-judge Bench of the Supreme Court headed by Chief Justice K G Balakrishnan pronouncing that in the case of a mentally retarded woman who is pregnant, she should be allowed to keep her pregnancy if the concerned authorities could guarantee the well-being of both the mother and the yet to be born. The last time the topic hit the headlines was in 2008 when the Bombay High Court had delivered a controversial judgment, where the foetus was detected with a congenital heart block and the permission to terminate pregnancy in its 26^th week was refused. The Hon’ble Court did not grant the permission because abortion beyond 20 weeks is not permitted under the MTP Act unless there is a serious threat to the mother’s life. The law had to be abided even though the parents themselves did not want the child. In the light of these developments, an attempt has been made in this paper to thoroughly analyze the MTP Act, the sole legislation governing abortions in India.

The MTP Act – A bird’s eye view

Prior to 1971, i.e. before abortion was legalized, once a woman exercised the option to conceive, termination of foetus was an offence under the IPC. The woman herself could also be held guilty of such an offence as Section 312 of the Code was worded so. This resulted in large number of illegal abortions being carried out by unqualified persons which often resulted in casualty of many women. Keeping in view such mishaps, the M.T.P. Act was enacted in 1971.

The MTP Act has been enacted to provide for the termination of certain pregnancies by registered Medical Practitioners and for matters connected therewith or incidental thereto. The Legislature has endeavored to incorporate certain grounds under which a woman would like to terminate her pregnancy, like-

1. Where the continuation of the pregnancy poses a threat to her health (this also includes the mental anguish caused to a pregnant woman in case of a pregnancy caused as a result of failure of any device or method used by herself or her husband for the purpose of limiting the number of children);
2. Where there are chances for the child to develop some physical or mental abnormalities which shall deprive him/her of living a healthy life when born. This is because when there is no possibility of begetting a living child with all human potential it is better to prevent such child to be born and thereby save it from earthly miseries.
3. Where the pregnancy is caused due to rape.

The medical practitioner (which term has been defined under the Act) is empowered to terminate the pregnancy of a woman within 12 weeks of pregnancy where he is of the bonafide opinion that continuation of pregnancy is harmful to the health of either the expectant mother or child. In case of pregnancy beyond the period of 12 weeks but within the 20^th week, such a bonafide opinion of two medical practitioners is required. Pregnancy beyond the 20^th week can be terminated only if it is necessary to save the life of the woman. Under all circumstances, pregnancy can be terminated only with the consent of the woman. Exceptions to this general rule have been carved out in the cases of minor and mentally ill women; here, consent of the guardian in writing is mandatory. The Act also prescribes the place where such abortions are to be carried out.

Conflict of interests

Rights of the unborn child

The very concept of abortion involves the clashing of interests of the expectant father and mother with that of their unborn child. The general thumb rule in such cases is that the right which advances public morality should prevail. In view of this, it becomes obligatory upon the State to strive to strike a balance amongst all the three.

The fact that the foetus is incapable of protecting itself makes it incumbent upon the legislature to impose restrictions on the termination of pregnancy. The legislature has always sought to do the same which is quite evident from the provisions of the personal laws. For example, under the Hindu Law, where the partition of the ancestral property was done without reserving a share for the son in the mother’s womb, he is entitled to have such a partition reopened. In the law of wills too, both in India and in England, a child in the mother’s womb is considered to be in existence. In fact, the Madras High Court in 1886 in Queen Empress v. Ademma has held that the foetus starts to have growth from the very beginning, the universally accepted criteria of life.

Further, these provisions are in conformity with the landmark US Supreme Court judgment of William L. Webster et al v. Reproductive Health Services et al, where the Court declared that ‘the life of each human being begins at conception’, and that the State can pass any regulation of abortion only on the grounds of one, to preserve and protect the health of pregnant woman, and the other, to protect the potential human life present in the foetus.

Another illustration to this endeavor of the legislature is the Maharashtra Regulation of Use of Pre-natal Diagnostic Techniques Act, 1988, wherein it is obligatory to obtain an undertaking from a woman who prefers such tests that she will not terminate the pregnancy if the diagnosis shows the possibility of a normal child of either sex. This Act was followed by a Central legislation being passed on the subject called the Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act, 1994. This enactment provides for the regulation of the use of pre-natal diagnostic techniques for the purpose of detecting genetic abnormalities or certain congenital malformations or sex-linked disorders and for the prevention of the misuse of such techniques for the purpose of pre-natal sex-determination leading to female foeticide, and for matters connected therewith or incidental thereto.

Right to privacy of the woman

The M.T.P Act not only provides for the safety of the pregnant woman but also respects the privacy of the family. The provision permitting abortion on the ground that the foetus is unhealthy is for the betterment of father’s genetic inheritance and leads to the welfare of the family. Thus, the legislation guarantees not only the right of the father to constitute a family, but it also ensures that a healthy family is constituted by him.

Where has the Act failed?

Though the MTP Act is quite a well-drafted piece of legislation, there are certain grey areas in this enactment which have to be addressed.

Section 3(2)(i) states that the pregnancy may be terminated at any time if it poses an immediate risk to the life of the woman. But, if such necessity is not immediate, a pregnancy may be terminated only if the length of the pregnancy does not exceed twenty weeks. For example, if the pregnancy is beyond the period of twenty weeks, and its continuance would involve risk to the life of the pregnant woman but the risk is not such as to require immediate termination of pregnancy, such pregnancy cannot be terminated. In such circumstances, the pregnant woman has to run the risk of waiting till it is so grave that it becomes immediately necessary to terminate the pregnancy.

In another instance, in case a pregnant woman is extremely depressed that she is likely to have an unwanted baby and the unborn child is in turn affected by this depression, such a situation cannot be construed as a ground for termination under the present law. In fact, there is no provision for the termination of pregnancy after the 20^th week if such continuation would lead to any abnormalities for the child when born.

Further, the enactment is very lopsided by taking cognizance of the consent of only the expectant mother. Consent of the husband in matters relating to pregnancy is very important. In fact, it has been held time and again in various cases that absence of the husband’s consent may lead to a matrimonial dispute on the basis of cruelty which is a ground for divorce under Section 13(1) (a) of the Hindu Marriage Act, 1955. For instance, in Satya (Smt.) v. Shri Ram, the High Court of Punjab and Haryana held that termination of pregnancy at the instance of wife but without the consent of her husband amounts to cruelty. In yet another case, Deepak Kumar Arora v. Sampuran Arora, a Division Bench of Delhi High Court has observed that “….if a wife undergoes abortion with a view to spite the husband it may, in certain circumstances, be contended that the act of getting herself aborted has resulted in cruelty.”

In an earlier English case of Forbes v. Forbes too, it was held that “if a wife deliberately and consistently refuses to satisfy her husband’s natural and legitimate craving to have children, and the deprivation reduces him to despair and affects his mental health, the wife is guilty of cruelty.”

Therefore, according to the principles of natural justice which requires taking care of the interests of all the parties concerned, where a woman becomes pregnant during the period of wedlock, she should not be allowed to terminate it at her will alone. In fact, in certain countries like Egypt, abortion can be performed only with the consent of the husband.

Further, Explanation II to Section 3 states that where any pregnancy occurs as a result of failure of any device or method used by any married woman or her husband for the purpose of limiting the number of children, the anguish caused by such unwanted pregnancy may be presumed to constitute a grave injury to the mental health of the pregnant woman.

This provision too is in itself an evidence of the discriminatory nature of the Act. On the failure of any contraceptive, the mental anguish caused to the woman is alone taken into consideration while the same agony experienced by the husband is ignored. On what basis is it to be claimed that a father ought to be compelled to stand passively during his wife’s pregnancy, knowing that he will be the one who has to bear the burden of raising and supporting the child.

Even in the case of abortion of minor or mentally ill person, the consent of the guardian is essential only when she decides to terminate her pregnancy but not when she chooses to complete the full terms and give birth to a child as can be interpreted from Section 3(4)(a).

The counterparts

The examples of other countries need to be taken into account to understand the changes that are necessary in our abortion laws.

Soviet Union was the first country to legalize abortions, as early as in 1920. This was to recognize the concept of complete feminine equality, a freedom propagated by Lenin.

The People’s Republic of China not only permits abortion on request but also provides it as a free public service. As soon as a woman realizes that she is pregnant, she is to declare that she does not want to have the child. Then, she is taken immediately for abortion.

Also, the amended Eugenic Protection Law of 1948 of Japan provides for allowing the performance of induced abortions for various reasons. This has helped in making the Japanese net reproduction rate among the lowest in the world.

Sweden is another country where abortion has been fully liberalized. The Swedish Parliament too, in 1974, approved a new legislation on abortion under which woman has been given liberty to decide for herself if she requires it or not.

But the United States is a country where the right to abortion and the right of the unborn child to be born alive has been balanced in a justifiable manner. Here, the right of privacy of a woman to abort is not absolute. Though the American Supreme Court recognized the right of a woman to abort in the landmark judgment of Roe v. Wade, the Court could not deny the existence of life in the foetus. In fact, in a later case William L. Webster et al v. Reproductive Health Services et al, the same Court reversed its earlier judgment and declared that ‘unborn children have protectable interest in life, health and well-being’.

Conclusion

As we have seen, the right to conception, the right to abortion and the right to birth are very much conflicting rights and requires a conscientious analysis. This is because the termination of pregnancy is not merely a question of the well-being of the expectant mother; it also has several far reaching physio-psychological implications on the family.

The existing law on the subject seeks to balance the rights of all concerned in a satisfactory manner. Under the present law, a woman has an absolute discretion regarding conception. At the same time, the discretion for abortion is limited by IPC and MTP Act as it is allowed only under exceptional circumstances. The unborn child may lose its life only when it poses a serious problem to its mother’s life or to itself. Thus, the right to abortion is regulated and child birth is also guaranteed.

Nevertheless, certain improvements ought to be made in order to remedy the aforesaid fallacies.

Firstly, instead of the present grounds upon which abortion can be performed, an amendment in the Act to the following effect that is suggested-

a. For the first six months of pregnancy, the decision to go for abortion may lie with the husband, wife and the doctor;

b. For the next few months of pregnancy, law may regulate the abortion on the same grounds as currently existing; and,

c. For the last weeks of pregnancy, when the foetus is medically found capable of surviving if born, law may even prohibit abortion except when abortion is necessary to save the life of the woman.

It is further recommended that the provisions of the Act relating to the age of consent for abortion purposes may also be modified. Presently, a minor cannot take a call with respect to her pregnancy on her own. Her guardian’s consent is the binding one. An amendment in this Section to the effect that “the consent of any pregnant women who is capable of forming a prudent opinion about the future of her pregnancy shall also be considered along with the guardian’s consent” is necessary. This amendment would also be in consonance with the aforesaid Supreme Court judgment which states that the pregnancy cannot be terminated without the consent of the woman.

Last, but certainly not the least, the enactment does not recognize medical practitioners from other systems of medicines like ayurveda, homeopathy and unani. An amendment in the definition of “registered medical practitioner” under section 2(d) to this effect would make it convenient for people from various other strata of the society too.

Facts

The respondent and 49 other persons were charged with various offences alleged to have been committed by them in the course of their raid as an armed gang on a certain factory known as the Jessop Factory at Dum Dum, Calcutta and they were convicted and sentenced to varying terms of imprisonment by the Special Court to which the case was sent for trial by the Governor of West Bengal by a notification dated 26th January, 1950, in exercise of the powers conferred by section 5 (1) of the Act. Thereupon the respondent applied to the High Court under article 226 of the Constitution for the issue of a writ of certiorari quashing the conviction and sentence on the ground that the Special Court had no jurisdiction to try the case inasmuch as section 5 (1), under which it was sent to that Court for trial, was unconstitutional and void under article 13(2) as it denied to the respondent the equal protection of the laws enjoined by article 14.

Under the West Bengal Special Courts Act, 1950:

Section 3 of the Act empowers the State Government, by a Notification in the official gazette to constitute special courts of criminal jurisdiction for such areas and to sit at such places as may be specified in the notification and more than one Special Court may be constituted for the same area or to sit at the same place. Section 4 empowers the State Government to appoint special judges to preside over such Special Courts and the classifications for such appointments are set out in the section.

Following this appears Section 5 which is the section which has been mainly the subject-matter of attack in this case. Clause 1 of the Section says A Special Court shall try such offences or classes of offences or cases or classes of cases, as the State Government may, by general or special order in writing, direct. Sections 6 to 15 prescribe the special procedure which the court has to follow in the trial of cases referred to it.

Issues

The main issue in this case was whether the West Bengal Special courts Act, 1950 constituting special courts and empowering State Government to refer to such courts “cases” or “offences” or “classes of cases” or “classes of offences is constitutional or not. And whether the object and effect of the law go hand in hand or not as per the intensions of the legislature.

Judgment

The judgment in this case, was given by a seven judge bench constituting of, Chief Justice Patanjali Shastri, Justice Fazl Ali, Justice Mehr Chand Mahajan, Justice Mukherjee, Justice C.R. Das, Justice Chandrashekhara Ayyar, Justice Vivian Bose. There were three opnion in this case with the Chief Justice, Patanjali Shastri gaving his Minority opinion in this case, and Justice Das came up with a balancing opnion. The rest of the judges, forming the majority, held the West Bengal Act unconstitutional and dismissed the appeal.

According to the minority opinion of Chief Justice Patanjali Shastri, it is a guiding principle of administrative law and mere conferment of discretion on the executive ipso facto does not amount of presumption that the law would be misused or abused. Mere arbitrariness should not be presumed as there should be definite proof of such arbitrariness of executive which is run by rational humans thus their judgment should not be considered worthless. Where there may be a clear violation of right to equality, and its ipso facto not proved, such an assumption that power has been misused is wrong. The object test and the effect test have to be followed. That is when misuse is being proved first the object and then the effect of it needs to be proved.

According to him, a situation has to come when one can judge according to that situation whether there has been a misuse or not and if there instance an instance of misuse proved the law should be struck down. This judgment seemed to be according to the British Common law model where they believed that the Legislature was the best judge of people’s interests.

Justice C.R.Das gave the balancing opinion in this case. According to him, when one puts together the categories of (1) cases and such classes of cases, and (2) offences and such classes of offences the onus is given to the executive to decide which kind of case should be asssigned to which court or whether a cerain case should be sent to Special Court or not. Merely the practice of exercising this decision is not important the context in which discretion was exercised is also important. In normal circumstances the matter is tried by an ordinary court under ordinary law but in special cases, accompanied by such classes of offences that are grave in nature beyond the normal parlance of occurrence, merely ordinary law cannot be involved in guiding the case. Number of people affected, circumstances of the event, magnitude of crime and nature of offences must be taken into account. In these conditions, special laws and special courts are appointed. Although prima facie the West Bengal law may seem discriminatory the context as to whether the law was used correctly has to be examined and also whether there was room for further use or misuse or abuse of this power Justice C.R.Das concurred with the majority opinion and laid down that a law’s validity can be traced back to circumstances under which it was formed. He clearly said that the object of the Act cannot be basis of classification and that cases need to be classified according to the object of the Act. Thus the history of that time and the crime that the law sought to prevent has to be studied. This was the prevailing ration till the R.C.Cooper[2], Bennett Coleman[3] cases came where along with intelligible differentia and the nexus of differentia with the object of the law, the Supreme Court also began looking at the effect that these laws had on people’s Fundamental Rights.

The majority ruled the case against State of West Bengal and held the West Bengal Law void as it gave arbitrary power to the executive and the legislature to decide which cases are to go a special Court and which ones are to be decided by a normal Court without making any classification in the law itself.

Analysis

In this case, we see that the language in Section 5 (1) says that the Special Court shall try cases and classes of cases, but it does not define that class. Then Sections 6 to 15 lay down the procedure the Court should follow but does not mention when that procedure is necessary as in when should a case go to the Special Court, to make that procedure necessary. Thus in this case I will analyze as to the reason the judgment of a Sumpreme Court went in favot of a gangster namely Anwar Ali Sarkar.

According to Justice Mukherjee,[4] if the legislature takes care to reasonably classify persons for legislative purposes and if it deals equally with all persons within a well defined class, it is not open to the charge of denial of equal protection on the ground that the law does not apply to other persons. It is also said and observed that there should be a nexus between the basis of classification and the object of the legislation. From the case Chiranjit Lal Chowdhuri v. Union of India[5] we know that it is not that Right to Equality under Article 14 of the Constitution, means that the same rule of law would be applicable to all and same punishment will be given to all irrespective of the differences in circumstances amongst different classes of individuals in the country. Similarly circumstanced individuals have to be treated equally in terms of privileges and liabilities[6]that is people who are similarly circumstanced should be a part of a well defined class and all the people within that well defined class, needs to be treated equally. Thus if a group of people have to be treated differently, then that group has to be well defined. If that group is well defined then the members of that group should be treated equally. That creation of different groups will not be enough as those people classified as belonging to that group should be legally classified. The legislature cannot create a group of people who will have to remain slaves. Every, legislation has an object it wants to achieve. That object has to be legal. Then the group has to be classified in accordance with that legal object. Thus, when a law is challenged before a Court as violating the equal protection clause mention under article 14 of the Constitution, the Court before deciding whether there has been any inequality has to decide whether the classification made in the legislation is in tandems with the object of the legislation.[7] In the present case, we find that the object of the law was to provide for speedier trials, which itself is too vague, uncertain and elusive as the legislature does not define which are the offences which in its view should be dealt with quickly and require speedier trial[8] as there were no class of people or a class of offences that was defines in the Act. So leave alone that the classification was made according to the object, as there was no classification made in the first place. The objective of having a speedy trial is that it should not take much time. The concept owes its origin to the popular adage, “Delay Defeats Justice”.

If a case has to be put under the Jurisdiction of a special Court, equal protection of the law and the equal basis on the procedure that law should be applied in, is important so that a different procedure is not followed for people accused of the same crime[9], and even when the purpose of a trial by a special court passes the test of article 14, the provision of a more onerous procedure than the ordinary, may offend the requirement of “fairness” under Article 21 and invalidate the law[10] as the procedure established must be just and fair. But in the present case, the West Bengal Act left an open room for the Government to give special treatment to people accused of the same crime. It simply meant that if there are two accused gangsters, one may be tried by the normal procedure while other might have to face the consequences of a special procedure. It is there is a law that a yardstick needs to be provided for cases and offences so as to separate those certain cases and offenses from the others which will not fall under the purview of the Act.[11] So, in a later case, since it was specified in the preamble of the Act that the Government was to select classes cases or offences for trial in a Special Court, which would affect public safety and maintenance of public order.[12] Anwar Ali’s case and the Saurashtra case were decided at almost the same time but in the latter the law made by the legislature was valid while in the former it was invalid simply because the latter laid down some valid ground of classification which was of public importance while the former laid down no classification to direct the Government, which could in that case use arbitrary power to select as the selection would be left to the free and absolute discretion of the Government, with absolutely nothing to guide or control its action.[13] Thus, when the standard or guide furnished by a statute is vague or uncertain or there is no standard left at all as in this case, it results to absence if any guide and thus such a statute got struck down in the majority opinion.[14] The administrative authority’s intention is that which is becomes material in case of such a law which does not lay down any guide but give the administrative authority the freedom to decide. Law is non discriminatory but its administration is challenged as discriminatory, the question of intention of the administrative authority becomes material.[15] That intention might be good or bad. According to the minority opinion of the Chief Justice sitting in this case that the Administrative body is filled with rational individuals. But if there is absolutely nothing to direct their action it will be difficult to judge which action of theirs is rational and which is irrational.

Justice Chandrashekhara Aiyar, in his judgment listed the seven principles formulated by Justice Fazl Ali[16], which he distilled out in Chiranjit Lal Chowdhri’s case.[17]

· The presumption is always in favor of the constitutionality of an enactment, since it must be understood that the legislature understands and correctly appreciates the needs of its own people. That its laws are directed to problems made manifest by experience and its discrimination is based on adequate grounds.

· The presumption may be rebutted in certain cases by showing that on the face of the statute, there is to classification at all and no difference peculiar to any individual or class and not applicable to any other individual or class, and yet the law hits only a particular individual or class.

· The principle of equality does not mean that every law must have universal application for all persons who are not be nature, attainment or circumstances in the same position, and the varying needs of different classes of persons often require separate treatment.

· The principle does not take away from the State the power of classifying persons for legitimate purposes.

· Every classification is in some degree likely to produce some inequality, and mere production of inequality is not enough.

· If a law deals equally with members of a well-defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons.

· While reasonable classification is permissible, such classification must be based upon some real and substantial distinction bearing a reasonable and just relation to the object sought to be attained, and the classification cannot be made arbitrarily and without any substantial basis.

So we see from the first principle, that it is supportive of the minority opinion in this case. But soon after the second principle favors the majority decision that if there is no classification at all, and yet the law hits a particular case then that presumption of a rational executive and a legislature can be rebutted. Again the sixth and seventh principles are also favorable of the majority opinion that there needs to be a nexus between the object of the law and the classification made. In this case however there was no classification made yet an individual case of Anwar Ali was be directed to be tried in a Special Court. This gave arbitrary powers to the State to discriminate in an unjustified manner. These seven principles are very important to understand the Right to Equality under Article 14 of the Constitution.

If we observe the argument of the minority opinion, given by the Chief Justice, saying that a law cannot be assumed to be discriminator until and unless a case of discrimination has occurred, according to me he is contradicting himself as he is assuming the executive to be filled with rational human beings who will not misuse their power and take rational decisions. So, by telling us that assumptions should not be made, he himself is making a very controversial assumption. On the other hand Justice Mukherjee clearly acknowledged the fact by citing the case of Skinner v. Oklahoma,[18]that the authorities may discriminate between individuals and send them for trial in a Special Court when such discrimination is not justified. Thus I will conclude by saying that the majority opinion was correct in this case as the West Bengal Act was unconstitutional as its object of speedier trials should be the implied object of any Act and moreover it gave arbitrary powers to the executive and such laws should be nipped in the bud instead of allowing such arbitrariness to first occur and then make a decision.

Case details:Bench Majority opined- Mishra Rangnath, Sawant  P.B and desenting view Ramaswamy. K.

Relevant statutory provisions (i) Karnataka Contract Carriages (Acquisition) Act (21 of 1976); s. 14 & s. 20;  (ii) Motor Vehicles Act  1988; s. 74 & s. 80(2); and (iii) The doctrine of Repugnancy: Article 254 of the Indian Constitution.

Reference cases (i) Ch. Tika Ramji v. State of Uttar Pradesh (AIR 1956 SC 676) ; (ii) Hoechst Pharmaceuticals Ltd. v. State of Bihar (AIR 1983 SC 1019).

Case Study:

The doctrine deals with List (III) schedule (VII) which declares both the Union and State legislatures competent to legislate. However in case of conflict between the laws, the Union law will prevail if it is made within an entry of List (III), irrespective of whether it the Union law is made by before or after the State Legislature. According to Article 254 (1) an overriding effect is provided to the provisions of a Parliament-made law which the Parliament is competent to enact or in with respect to any matter as enumerated in the List III of Schedule VII. In such a scenario if any provision of a State-made law is in conflict with the Parliament–made law under such circumstance the State-made law is declared void to the extent of repugnancy.

Under List III named as the Concurrent List in Schedule VII of the Indian Constitution both the Union and State Legislatures are competent to make laws on any of the entries mentioned therein. However they are subject to Clause (2) of Article 254 only in case, there is no conflict between the provisions of the said State-made law and a Central Act on the subject. However in case there is a repugnancy in question of a State law and Union law enumerated on one of the subjects of List III, the State law must yield to the Union law unless it has already been reserved for the assent of the President and has duly received so under Article 254 (2). The question of repugnancy therefore rightfully arises when there is a direct conflict between the provisions of the State law and the Union law on the same occupied field. Laws are said to be repugnant ideally when they get involved into taking responsibility for obedience to a higher authority. Simultaneously however certain inconsistent enactments to each of these laws may sometimes be possible without disobeying the other. Thus a suitable instance for repugnancy arises only when legislation falling in List III, the Concurrent List can be cured by resorting to Article 254 (2).

The question of repugnancy under Article 254 arises when the provisions of both laws are fully inconsistent or are absolutely irreconcilable and it is impossible to obey without disobeying the other, or conflicting results are produced when both the statutes covering the same field are applied to a given set of facts.

In the present case brought to the Supreme Court a conflict between the provisions of a State Act; Karnataka Contract Carriages (Acquisition) Act, 1976 and a Union Act the Motor Vehicles Act 1988 have been discussed. The conflict spoken of is in respect to two entries in the Concurrent List, Schedule VII, where the Karnataka Contract Carriages (Acquisition) Act, 1976 has been made in relation with Entry 42 of List (III), Schedule (VII), and the Parliamentary Act on transport regulation i.e., the Motor Vehicles Act 1988, that has been made in relation to Entry 35 of List (III). The question in the matter was whether Section 14 and 20 of the Karnataka Act was repugnant to Sections 73, 74 and 80 of the Motor Vehicles Act 1988. These writ applications were brought by some of the private carriage owners under Article 32 of the Constitution by a group of disgruntled applicants for contract carriage permits. Their grievance was in regard to action of the concerned transport authorities in Karnataka in not entertaining their applications under the provisions of the Motor Vehicles Act, 1988. The judgment and points of view of the different judges was varying in this case. The majority judgment was given by JJ. Ranganath Misra and JJ. P.B.Sawant and the dissenting opinion was given by JJ. K. Ramaswamy.

The objective of formation of the Karnataka Act 1976, was to prevent the misuse of the contract carriages as they were state-owned property under the State Undertaking of Regional Transport Authority (RTA) and also to provide better facilities for the transportation of passengers by road

and to give effect to the policy of the State mentioned clearly in regard to the Directive Principles of State Policy in A. 39 (b) and (c). towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.

The Supreme Court has interestingly observed in Tika Ramji’s case, that no question of repugnancy can arise out of Article 254 where the Union legislation and the State legislation occupy two different fields which necessarily deal with two distinct and separate matters. In the aforesaid case, there was no inconsistency of the Acts enacted by the Parliament and the State as regards Entry 33 of List III. In this scenario the perfect test of repugnancy would be to check whether the Parliament and the State legislature in exercising their competent law-making authority have exercised it on the same subject matter or not. The other scenario can be to check whether laws enacted by the Union were intended to be exhaustive enough to cover the entire field of legislation.

In the present case Section 14 read with Section 20 of the Acquisition Act freezes the right of a citizen to apply for and to obtain permit or special permit to run a contract carriage in terms of the permit and monopoly to run a contract carriage. This was conferred on the State Transport Undertaking Karnataka. But the Motor Vehicles Act, 1988 evinces its intention to liberalize the grant of contract carriage permit by saying in Section 80(2) stating that the Regional Transport Authority “shall not ordinarily refuse to grant the permit”. It also confers the right on an applicant to apply for and authorizes the Regional Transport Authority to grant liberally a contract carriage permit. We clearly observe that the Motor Vehicles Act 1988 accords the right, while the Karnataka Contract Carriages (Acquisition) Act,1976 negates and freezes the self-same right to obtain a permit and to run a contract carriage and prohibits the authorities to invite or entertain an application and to grant a permit to run contract carriage. The Act and the relevant rules cover the entire field of making an application in the prescribed manner and directs the Regional Transport Authority to grant permit with condition attached thereto to run contract carriages.

Thereby there exists the operational incompatibility and irreconcilability of the two sets of provisions. Sections 14(1) and 20(3) of the Acquisition Act are repugnant and inconsistent to Sections 74 and 80 of the Act. By operation of proviso to Article 254 clause (2) of the Constitution, the conflict created by Sections 14(1) and 20(3) of the Acquisition Act to make or invite an application issued to Regional Transport Authority prohibiting to grant contract carriage permit to anyone except to State Transport Undertaking, Karnataka within the State of Karnataka became void following the doctrine of repugnancy. Sections 74 and 80 relating to the grant of the contract carriage permit and the procedure in applying for the grant of such permits respectively are present in the Motor Vehicles Act 1988. This means that when, a scheme is prepared by the State Government entrusting the contract carriage services in relation to any area or route or portion thereof, to a State Transport Undertaking to the exclusion complete or partial of other persons, the provisions of Sections 74 and 80 would have no application, and the private transport operators cannot apply for the grant of contract carriage permits under s. 80 nor can such permits be granted by the Transport Authority. The Motor Vehicles Act 1988 thus also makes a provision for nationalization of routes, and envisages a denial of permits to private operators when routes are so nationalized. Hence it cannot be said that there was a conflict between the provisions of the Karnataka Act and the M.V. Act, 1988.

Whenever we need to know the legitimacy of an existing repugnancy between the Centre and State legislation, the most common test applied is to find out the dominant intention of the two legislations. If the dominant intention i.e. the pith and substance of the two legislations is different, it is assumed that the legislations cover two different subject-matters. There may be instances where the provision of one legislation while giving effect to its dominant intention may incidentally encroach upon the subject and jurisdiction of the other legislation. But such partial coverage to achieve a different purpose does not invoke a solution to the existing conflict under Article 254 (2) of the Indian Constitution. However when the conflict between the impugned legislations concerns the subject matters laid down in List III, the application of the Doctrine of Pith and Substance is illogical and groundless because the conflict is not regarding the want of legal competency. Both the State and the Union Legislatures are competent to make laws under List III. The issue in determining repugnancy is to examine whether the provision of a State-made law has lost its validity because it is conflicting with a law made by the Parliament. Thus according to the opinion of J. K. Ramaswamy the doctrine of pith and substance and dominant intention has no ground of applicability in the present case. It is a clear case of repugnancy whereby the impugned State law has received assent of the President under Article 254 (2) on March 11^th 1976. A Seven Judge Bench upheld the validity of the State statute holding that the impugned statute was an ‘acquisition Act’ within the ambit of Entry 42 of the Concurrent List under Schedule VII of the Constitution was valid. They mainly did so to uphold the federal structure of the Constitution by giving a chance to the State law to survive. By applying the doctrine of pith and substance the Court took note of the fact that even though it may have had some incidental impact on inter-State trade or commerce, the State Law would be upheld.

The people of the country want to know how the government is functioning. People have many questions regarding the functioning of the government. So, to answer all the questions of the people, the Parliament passed a new Bill known as “The Right to Information Act, 2005”. The Bill was presented in Parliament on 22^nd December, 2004. After intense debate till 15^th June, 2005, it was finally passed on 15^th June 2005 and came into force on 12^th October, 2005. Before passing of this Act, Disclosure of Government Information in India was governed by a law enacted during the British rule named as Official Secrets Act of 1889 which was amended in 1923. After 1923, it has taken India 82 years to transition from an opaque system of governance, legitimized by the colonial Official Secrets Act, to one where citizens can demand the right to information.

The Right to Information Act is aimed at ensuring transparency in the functioning of Central & State Governments. The Act provides for setting out the practical regime of right to information for the people to secure access to information under the control of public authorities to promote transparency and accountability in the working of every public authority, the Central Information Commission and State Information Commissions have been constituted for this purpose.

The Right to Information is derived from our fundamental right of freedom of speech and expression under Article 19 of the Constitution of India. It says, “All the citizens shall have the right to freedom of speech and expression.” The main idea is that if the people do not have any information regarding the functioning of the Government and public institutions, then people cannot express any informed opinion on it. In a system of democracy where citizens being at the centre of government – rule of the people. For such a democracy to function, Freedom of Press is necessary to be understood first. The main reason for a free press is to ensure that the citizens are informed. Thus, it clearly flows from this that the citizens’ right to know is paramount.

Supreme Court on the Right to Information as a Fundamental Right:

In a famous case of State of UP v. Raj Narain, Justice Mathew ruled, “In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. Their right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have no repercussion on public security”.

In Bennett Coleman Case, the right to information was held to be included within the right to freedom of speech & expression guaranteed by Article 19 (1) (a).

In S. P. Gupta Case, the right of the people to know about every public act, and the details of every pubic transaction undertaken by public functionaries was described.

The Right to Information has been recognized as a fundamental human right, which upholds the inherent dignity of all human beings. The Right to Information forms the crucial underpinning of participatory democracy. It is essential to ensure accountability and good governance. The greater the access of the citizen to information, the greater the responsiveness of government to community needs. Alternatively, the more restrictions that are placed on access, the greater will be the feelings of ‘powerlessness’ & ‘alienation’. Without information, people cannot adequately exercise their rights as citizens or make informed choices.

The free flow of information in India remains severely restricted by three factors:

a. The legislative framework includes several pieces of restrictive legislation, such as the Official                       Secrets Act, 1923;

b. The pervasive culture of secrecy and arrogance within the bureaucracy; and

c. The low levels of literacy and rights awareness amongst India’s people.

The primary power of RTI is the fact that it allows the individual Citizens to requisition information. Hence, without necessarily forming pressure groups or associations, it puts power directly into the hands of the foundation of democracy – the Citizen.

The new law passed by Parliament places India among the 55 countries to have such legislation. The Act provides the citizen the right to seek information on many matters but not on all matters. It does not permit citizens to seek information of certain matters affecting security, strategic, scientific or economic interests of the country. It gives citizens a legal right to be informed about utilization of public funds, progress reports of ongoing projects, state circulars, contracts, etc.

Definition of Right to Information:

The right to information is defined in Section 2(j) of the Act which means the right to information accessible under this Act which is held by or under the control of any public authority & includes the right to –

(i) inspection of work, documents, records;

(ii) taking notes, contracts or certified copies of documents or records;

(iii) taking certified samples of material;

(iv) obtaining information in the form of diskettes, floppies, tapes, video cassettes or in any other                         electronic mode or through printouts where such information is stored in a computer or in any                       other device.

Procedure of Application & Publication of Request:

The Act & its rules define a format for requisitioning information, a time period to provide information, method of giving information & some exemptions when no information can be requisitioned:

Section 4 of the Act makes a duty of public authorities to maintain records for easy access & to publish within 120 days the name of the particular officers who should give the information & in regard to frame rules, regulations, etc. Under the Act, all authorities covered must appoint their Public Information Officer (PIO).

Section 6 of the Act provides that any person can submit the request for information in Hindi or English or in official language of the area accompanying prescribed fee without assigning any reason for the request or any personal details except his name and contact particulars. Such a request shall be made to:

(a) the Central Public Information Officer or State Public Information Officer, as the case may be, of                     the concerned public authority;

(b) the Central Assistant Public Information Officer or State Assistant Public Information Officer, as                      the case may be.

It is the obligation on the PIO to provide information to the person requesting for such information under the Act. If the request pertains to another public authority (in whole or part), it is the PIO’s, it is the PIO’s responsibility to transfer/forward the concerned portions of the request to a PIO of the other area within 5 days.

In addition to this, every Public Authority is required to designate Assistant Public Information Officers (APIOs) to receive RTI requests and appeals for forwarding to the PIOs of their public authority.

Section 7 of the Act specifies time limits for replying to the request:

· If the request is made to the PIO then the reply must be given within 30 days of the receipt of request on payment of prescribed fees.

· If the request is made to the APIO, then the reply must be given within 35 days of the receipt of request on payment of prescribed fees.

· If the PIO transfers the request to another public authority (who is better concerned with the information), then the reply must be made in 30 days but the period must be computed from the day after it is received by the PIO of the transferee authority.

· When the information is relating to life or liberty of a person, the information shall be provided within 48 hours.

· Information concerning corruption and Human Rights violations by scheduled Security agencies (those listed in the Second Schedule of the Act) is to be provided within 45 days but with the prior approval of the Central Information Commission.

If the request is rejected then the rejection of request shall be communicated under Section 7(8) with valid reasons of rejection, specifying the procedure & proof for appeal & the designation of the appellate authority.

Section 7(9) says that information shall ordinarily be provided in the form in which it is sought unless it would disproportionately divert the resources of the public authority or would be detrimental to the safety or preservation of the record in question.

Fees:

It is mentioned that a fee of Rs. 10.00 is payable along with the application. In addition to this, a fee of Rs. 2.00 per page or Rs. 50 for CD etc. is also mentioned. If the applicant is Below Poverty Line, then no fee shall apply. Such a person has to provide a copy of his BPL Card along with the application to the Public Authority.

Exemptions:

It provides certain exemptions when no request for disclosure of information shall be entertained as per the contents stated in sub-clauses (a) to (j) of Section 8. Sub-clause (b) exempts information, which is expressly forbidden by any court of law or tribunal or the dispute of which may constitute contempt of court. Sub-Clause (g) exempts information the disclosure of which would endanger life, or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purpose. Sub-clause (h) exempts information, which could impede the process of investigation or apprehension or prosecution of offenders. Sub-clause (i) exempts Cabinet papers.

· The Right does not extent to Jammu & Kashmir or to security agencies like IB, RAW & BSF. File Notings by Bureaucrats won’t be made public under the Act

Penalties:

Section 20 of the Act has provided for penalties against Central Public Information Officer or State Public Information Officer, as the case may be:

(i) If the concerned Public Information Officer refuses to receive any application or do not furnish                       information within the time specified in the Act or malafidely denies the request for information                     or knowingly gives incorrect or incomplete information then a penalty of Rs. 250 each day shall                     be imposed till information is furnished or received by the person. The total amount of penalty                       shall not exceed Rs. 25000.

(ii) The penal provisions are the strength of the Act, which ensure that the Public Information                               Officer does not treat citizens’ demands for information in a cavalier manner.

The Right to Information is derived from our fundamental right of Expression under Article 19 of the Constitution of India. If we do not have information on how our Government and Public Institutions function, we cannot express informed opinion on it. So, it is recognized as a very important right and people should avail and make good use of this right.

Technology evolves by leaps and bounds while the evolution of law occurs at much slower pace. The year 1999 heralded a new revolutionary service on the internet – Napster- brainchild of an 18 year old college dropout Shawn Fanning. Napster was essentially a service used to find and download music on the net. Napster was based on the “peer to peer” file sharing technology. The technology proved to be so popular that 5.8 million people visited the site within a week of its launch. Though the main aim of service was music download, the users of this service found illegal uses for napster which included illegal transferring and copying of copyrighted material. The ease with which such illegal activity could be conducted attracted more and more users to napster leading to the copyright infringement on a massive scale. This led to a revenue slump for many major recording companies. The ensuing litigation in napster and subsequent cases resulted in the development of U.S copyright law.

This article is an attempt to trace the evolution of secondary liability in the field of copyright infringement by the u.s supreme court in the case of

”Sony corporation of America inc. v/s Universal City Studios Inc.’’ to ‘’Metro Goldwyn Mayer Studios inc. v. Grokster Ltd.’’ where the inducement standard was imported from patent law to copyright law in the light of evolving peer to peer technology.

What is peer to peer technology (P2P)?

Traditional methods of distributing files over the internet involved a model popularly known as the client server model.In this model the files to be distributed are held on a few servers and could be accessed by users (clients) who downloaded the data as per their wish. This method was not an efficient technique of transferring data as the data flow was one way (server to client), the running costs were prohibited and there was a risk of the whole system crashing if the server failed.

Programmers in 1990s began toying with the idea of creating networks to mass distribute copyrighted material. But these applications were basically client server models which were deemed illegal by the courts. But the idea of online file sharing had already taken root in programmer minds. Enterprising programmers sought to overcome the technical and legal difficulties encountered by early file sharing applications. The fruit of their efforts were the P2P file sharing networks which proved to be a cheap, reliable and efficient mode of sharing and distributing data.

The concept of P2P networks is that the data to be shared will exist on many computers (peers) many of which can supply the existing data on request. Structured on this general principle are three types of P2P platforms:-

1) Centralized indexing system

2) Super node indexing system

3) Local indexing system.

All of these systems integrate three basic components:-

1) client

2) server

3) Index

A client is a web browser like application allowing users to perform searches and get the required data. A server is a computer which interprets the requests from the clients for resources on other computers in the network

The index maintains a list of resources available on a p2p network.

Though the 3 types of p2p platforms accomplish same task they differ substantially in their mode of functioning. In the central indexing system, a server is maintained to process all the requests for data and to index all the files available on the network at any given time. This platform requires more administrative management but is comparatively more secure and better regulated.

In a local indexing platform (pure peer type) the working is completely decentralized and all users are on an equal footing . Each user’s computer is called a”node”. Each computer maintains an index of all the files available on it. Because of its structure this platform suffers from inconsistent performance, instability and has difficulties in expanding its user base as finding reliable source of data is hard.

The last platform and arguably the most popular is the super node model where a few nodes are selected to act as indexing servers or super nodes while the data exists on user computers. This hybrid platform tries to make the best use of stability offered by centralized indexing systems and the decentralized pattern of local indexing systems. .

The Menace – The Economic impact of Peer 2 Peer technology

The P2P platforms unquestionably made the downloading and sharing of media files so simple that even the less net savvy have learned to adapt. But despite these benefits the fact remains that corporate holders did not grant legal permission for the media to be shared and distributed on p2p networks.

Musicunited.org estimates that 2.6 billion files are illegally downloaded each month. As of august 2005 compared to legal online music stores, P2P services attract up to 60 million more users in the USA.

Recording Industry Association of America (RIAA) claims that retail value of shipments of recorded music in the USA has dropped from about $13.5 billion in 1999 to $11.5 billion in 2005.

In 2004 “Big champagne”, an internet measurement service estimated 13 billion songs were available for illegal download and sharing on P2P networks. The Year 2005 saw a further fall in the sales of music albums in the USA by 7%. World wide the recording industry estimates about $ 4.5 billion is lost to piracy. At any given time 7.6 million people are logged on to p2p networks .

Several p2p network designers are now involved in the creation of “Small – World networks” to go around the legal and technical complexities that have risen. A new development in p2p networks is the use of military grade encryption and randomization to prevent the loss of user anonymity when agencies hired by major copyright holders are trawling these networks for copyright abuses.

The American copyright act invests in copyright holder a bundle of rights which include rights of reproduction of the work , creation of derivative work , public performance , distribution and digital performance. Though a small minority of users who put up media files for distribution have legitimately purchased the media they are sharing. The rights they hold in the media is limited putting up media files on P2P networks is in excess of the rights granted under the license agreement to which the user subjects himself when he is buying the product .

An attempt to reach a solution:-

P2P networks have increasingly become a significant part of our information sharing process. The problem with P2P networks is that most of the material shared is copyrighted and such sharing violates the exclusive right of the copyright holder to make and distribute copies. The question invariably arises: Who should be liable for such copyright violations? Is it the people who share copyrighted information or is it the P2P networks facilitating such direct user infringement?

Courts have attempted to answer these difficult and policy ridden questions by using pre existing legal principles. The American Copyright Act of 1909 and 1976 mainly deal with primary liability that is the liability can be imputed only on those who directly infringe copyrights. But courts have long imposed liability for actions taken by third parties. This sort of liability is called Secondary liability. Secondary liability is of two types- Contributory liability and Vicarious liability. These primarily exist to inculpate parties who do not infringe copy right of the owner.But both vicarious and contributory liability impinge upon infringement by a direct infringer.

Vicarious liability is an extension of the tort concept of “Respondent Superior” which imputes liability to employers for the acts of their employees who are acting within the scope of employment. Vicarious liability if it is to be applied has to satisfy two conditions:-

1) The ability and right to supervise the infringing conduct and,

2) The direct and obvious financial interest in the infringing activity.

The concept of contributory liability grew out of a separate tort concept of Enterprise Liability which allows an injured party who cannot identify which industry manufacturer is responsible for the injury to hold all members of the industry liable in participating in manufacture of that harmful and injurious product.

Despite the long standing common law origin of Contributory Infringement case laws were scarce till the early 80s. The Supreme Court in the

Case of, Kalem co. v.Harper Bros., Kalem commissioned a man to turn the book “Ben Hur” into the now famous movie with the same name.

Without first securing permission from the copyright holder in the book. Justice Homes in his now famous judgment found that Kalem was liable for contributory infringement because of its act of contribution to advertising in the films.

In the famous 1963 case of Shapero Bernstein and co. v.H.L.Green Co. and in the 1971 case of Gershwin publishing co.v. Columbia Artist Management Inc the second circuit court of appeals defined the contributory infringer as one who, with the knowledge of the infringing activity, induces, causes, materially contributes to the infringing conduct of another. This definition had two necessary ingredients:-

1) The alleged infringer possesses knowledge of the infringement

2) Has the reason to know of the direct infringement.

The Sony doctrine

In the 1984 US Supreme Court case of Sony Corp. of America .v. Universal city studios Inc. Disney and universal studios copyright holders of innumerable TV programmes sued Sony, the manufacturer of then – new

Betamax video tape recorders for the alleged infringement of the copyright act by customers of Betamax in recording copyrighted TV programmes.

The court in this historic case acknowledged the brotherhood of patent and copyright law the patent law principle of contributory infringement was added to supplement contributory copyright infringement jurisprudence. the express exception to contributory infringement in patent law that is anyone who “ offers to sell or sells… a staple article or commodity of commerce suitable for substantial non infringing use “ was invoked. The court invoked the Staple Article of Commerce Doctrine to resolve the complex problem before it, emphasizing the need to balance the propriety interest of copyright holders against “The right of others to freely engage in substantially unrelated areas of commerce”, applying this doctrine the court held that Sony was not liable for contributory infringement because the Betamax was capable of substantially non infringing uses. The court deemed time – shifting an activity where users used VTR’s to record a programme for later viewing because of the following reasons:-

1) some copyright holders authorized consumer time shifting and

2) Unauthorized time shifting constituted fair use because it did not significantly affect the market value or the interests of copyright holders.

A significant feature of this judgment was that the court did not focus on the traditional contributory infringement requirement that the contributory

infringer possesses knowledge of the infringing activity. The court further said that the defendants Sony would only be liable if they possess actual or constructive knowledge.

Application of Sony doctrine in P2P litigation

CASES:-

(1) Napster

In A & M records inc. v/s Napster, Inc. the case which went from the 9^th circuit court of appeal to the Supreme Court was the first major case which was filed against P2P networks by the recording industry. In this case the approach of the ninth circuit differed substantially from the Supreme Court. The ninth circuit was asked to look into whether the user of napster could be declared as fair users under the copyright act. .Napster argued that users were using the content for three fair uses:-

1) Sampling – downloading a song to decide whether to purchase it.

2) Space shifting – copying a song from a cd one has legally purchased

3) Permissible distribution

With respect to sampling, the court decided that consumers are less likely to purchase from legal sources when they have already downloaded music and that such downloading creates a barrier to launch retail downloading by the industry. With respect to space shifting the court said space shifting in Napster could be clearly distinguished from time shifting in Sony because the content in this case could be broadcast to the general public. Once a user puts a song he owns onto the Napster network while such activity could not be done in Sony. The court found Napster users were not fair users. It added the use was merely copying and infringing use was commercial.

The circuit looked into Napster’s secondary liability in the form of contributory liability by looking at Napster’s knowledge of infringing activities. Napster tried to use “The Staple Article of Commerce Doctrine from Sony as a defense”. But the court rejected this approach because the doctrine was a mere “gloss on the knowledge element”. The court rather decided that “in an online context, evidence of actual knowledge of specific acts of infringement is required” to establish contributory liability. So even if Napster was capable of substantial non infringing uses it would still be a contributory infringer if it had knowledge of specific acts of infringing. The evidence that RIAA notified Napster of thousands of infringing files on its network and the failure of napster to remove those files made Napster liable. Further the court found the very purpose and architecture of the service aided users infringing conduct.

Evaluating vicarious liability aspect of Secondary liability for providing the file sharing software, the court declined that the Sony doctrine did not apply to vicarious liability and is limited to contributory infringement because the vicarious liability aspect was not before the Supreme Court. Napster met the first element of vicarious liability as it had a direct financial interest in the infringement, because the pre downloading induced the users to register with the service. The court also found napster satisfied the 2^nd element of vicarious liability and supervise infringement as the service had the ability to locate infringing material listed on its search indices and the right to terminate user access to the system because Napster did nothing to remove infringing files. The court held that Napster’s ability to block user access was sufficient evidence of supervisory capacity. Thus Napster was held liable for copyright infringement and had an out of court settlement for a token sum of 50 million U.S. dollars with the RIAA.

(2) Aimster

In 2003 the seventh circuit court of appeal had before it the litigation of In Re Aimster where the music industry sued the programmers of a P2P programme for contributory and vicarious liability. The Aimster service utilized American Online Instant Messaging services to enable copyright material distribution because the files were not kept on Aimster servers; it escaped liability for direct infringement.

The court in its approach took a novel path to access the potentially non infringing uses of a product. The court did not take the Sony approach to determine non infringing uses of the technology. Instead the court wanted to examine the array of potential users to determine just how infringing the product was. The court thought “magnitude of these users is necessary for finding of contributory infringement.” The court determined to establish actual use as a threshold and thus evidence proved aimster was pre-dominantly used to infringe copyrighted material.

In examining Aimster’s liability for the contributory infringing aspect of secondary liability the circuit court departed from Napster’s knowledge requirement by holding actual knowledge of specific infringing unnecessary. Instead if Aimster’s developers believed its users would utilize the programme to infringe, the programmers should not have created the programme or adequate steps should have been taken to ensure against infringing activities . In discussing whether encrypted data transfer on part of aimster to engage in “Willful blindness would amount to knowledge in copyright law”. The court decided willful blindness is taking affirmative action to shield oneself from learning about the unlawful acts. Thus it was held aimster could not avoid the knowledge element of contributory infringement. on the question whether aimster materially contributed to infringement the court said aimster is like “An aide and an abettor” of criminal activity examining Aimster’s culpability under vicarious infringement was not answered satisfactorily regarding ability and control because the court explained that if a the Sony decision had mandated that the Betamax undergo design changes the issue would be clearer. The court further said where the copyright owner proves infringement; he is not required to show a financial loss occurred to get an injunction .

(3) Grokster II

The Ninth circuit was called to look into the case of Metro Goldwyn Mayor v/s Grokster Inc. the year 2005. This case was landmark as the district court and the circuit court of appeals held that Grokster was not liable by quoting the precedents in earlier cases which talked of secondary liability in Copyright infringement like Sony, Napster, Aimster and on the fact that the architecture of Grokster did not allow the developers of the software to control user activity in any way.

The court held that Grokster was not secondary liable for direct copyright infringement rights users even though 90% of the content exchanged over Grokster was protected by copyright and 70% of the copyright in that content was held by the plaintiff. Because of the fact that unlike Napster which used a centralized server to store the indices of thee files available on its network, Grokster did not have a centralized server, the program was wholly decentralized, and it depended on its users to create their own network to distribute files.

Analyzing the Secondary liability aspect the court used the ‘Staple Article of Commerce’ doctrine from Sony. The court further held that all the defendants needed to show was that the program had substantial non infringing uses. The defendants proved the program had substantial non infringing uses in that unpublished works of new artists , literature available on Project Gutenberg and movies released on Pre – Linger archives were distributed through this network.

Discussing whether Grokster substantially contributed to Material Infringement the court said because Grokster did not host actual files or a list of files on an index , the distributors could not control access of the users the court decided that grokster did not contribute to the infringement.

In determining the vicarious liability the court decided that by virtue of the soft wares the architectural design, there was no right or ability to block individual users. Moreover there was no way to trace users because registration was not requisite. Thus the court determined the defendant did not have the right or the ability to supervise the user. The 2^nd element, financial interest in the infringing activity did not hold water as grokster model had no advertising revenues. Thus the 9^th circuit held grokster was not liable for secondary infringement.

(4) Grokster III – the new doctrine of “Inducement Standard” evolved by the Supreme Court:-

On July 27, 2005 the Supreme Court made its decision on Grokster III where the question in front of the court was “under what circumstances the distributor of a product capable of both lawful and unlawful use is liable for acts of copyright infringement by 3^rd parties using the product?”

The essence of the supreme court judgment was that “ Whoever distributes a device with the object of promoting its use to infringe copyright , as shown by a clear expression or other affirmative steps taken to faster infringement , is liable…” for third party infringement .

The Supreme Court in its judgment declared that the Ninth circuit misapplied Sony doctrine and its stand that Grokster’s capability for non infringing uses precluded liability for contributory copyright infringement was a wrong interpretation.

The court distinguished between the knowledge aspect in Sony and Grokster by saying that in Sony there was knowledge that only some user would infringe while grokster promoted infringing uses of its product. The court held the Ninth circuit holding of just looking into the capacity of non infringing uses and not examining the defendants intent was an error. The court looked into the evidence of the defendant’s intent to determine the liability in this case.

The Inducement Standard now applicable to Copyright law

The Supreme Court held Grokster was liable for contributory infringement as it intentionally induced and encouraged direct infringement. Rather than applying the Sony standard the court adopted the patent law theory of “Intentional inducement of infringement”. This theory of liability requires the plaintiff to prove that the defendant knowingly aided and abetted another’s direct infringement. The court further said specific intent to encourage infringement – something more than mere knowledge was reqd. to hold the plaintiff liable. The evidence that internal communication and advertisement showed Grokster’s intent to retain previous napster users and their business model of selling advertising space on the software proved the malicious intent. Moreover as held in the case of Oak industries v/s Zenith electronics the court held that advertisement indicates an affirmative intent of the product to infringe.

Conclusion

Because of the Court’s decision to remand the matter, lower courts now must apply the inducement test, which is really an intent-based test that focuses on the object of a defendant’s enterprise in future litigation. Unfortunately, the standard does not give much guidance to innovators and distributors. If there are communications, either internal or shared with the public, that encourage infringement, then those software distributors are likely to be liable based on an intent to induce infringing activities. Because of the new test, discovery disputes will likely arise, with plaintiffs desiring every communication voiced, written, emailed, or conveyed by the defendants.

Regardless of what any court holds, P2P software will continue to function on users computers. Additionally, companies might be rewarded by offering software in countries with no fully-formed Copyright or patent laws. Some believe that the case is wholly irrelevant because without re-designing how the Internet works, illegal file sharing will continue. Files can be transferred in e-mail attachments.and they can be transferred through Instant Messaging. They can be transferred via MMS. File transfers are basic to networking – the future of the Internet without the ability to transfer files we’re down to typing.

CCPs are necessary in all kinds and sizes of organizations. There may not be a formalized CCP framework in small organizations but the same must be implemented in some other way in order to generate awareness. CCP is a vital part of competition advocacy and awareness and hence it must meet the changing requirements and should undergo a regular evaluation process. It is an important management tool for good business practice as it clearly defines behavioral standards. Defined standards give the employees knowledge of the regulatory risks faced by the organization in case of violating the standards. This, in the long run is beneficial to both, the organization as well as the consumers. The major advantages of CCP are low risk of an investigation into the enterprise by the Competition Authorities, lesser chances of agreements being void and unenforceable, lesser risk of reputation being hampered, avoidance of litigation due to unlawful conduct.

CCPs not only generate awareness regarding the concerned laws but also train the personnel in an enterprise to follow the said laws. They also help identify the potential discrepancies or disputes that may arise in the near future. The knowledge of competition laws will prepare the employees in a manner to recognize and handle the issues when the enterprise is affected by any anti-competitive agreements. Also, the legal costs of the enterprise are reduced by avoiding violation of competition laws. The enterprises, thus, save time and money by reducing the tedious litigation caused due to anti-competitive behavior.

At the outset, it is necessary to identify the application of competition laws in the sector in which the particular enterprise falls. The risks involved in the said sector should be adjudged and if the same are high, then a convoluted CCP should be set up. The market position of the organization should also be kept in mind while developing a CCP for it. The possibility of the organization having a ‘dominant position’ in the market should also be taken into consideration. All the above mentioned factors will help in devising a suitable CCP for the organization.

At this juncture it may be pertinent to discuss the CCPs introduced by a few other jurisdictions and their comparison with the Indian CCP. It may be relevant to begin with the CCP of the United Kingdom (UK) introduced by the Office of Fair Trading (OFT). According to the OFT, the most important factor leading to an effective CCP is the management’s commitment to compliance. The OFT has also identified the key steps to an effective CCP which are risk identification, risk assessment, risk mitigation and process review. These four steps would ensure that the enterprise is able to identify the potential risks of anti competitive agreements and violations of competition laws. They would also assist the enterprise assessing the said risks beforehand and having solutions to cope with them.

The OFT does not stress on a standard or a rigid CCP but defines four essential elements of a CCP. These may be listed as support of senior management, appropriate policies and procedures, effective training and regular evaluation. The OFT stresses upon updating the CCPs from time to time in order to keep up with the current best practices.

The OFT does not endorse individual compliance programs. According to the OFT, compliance programs must be capable of meeting the changing requirements of the industry and the enterprise must make efforts as part of the regular evaluation process to ensure that the compliance program continues to be relevant. In these circumstances endorsement would be inappropriate. The OFT states that in addition to their powers under the Competition Act 1998, the sector regulators continue to have powers under the legislation specific to the sectors they regulate. In certain circumstances they may use these powers to order a business to submit a compliance program. This does not, however, mean that OFT would be willing to endorse individual program.

It may be pertinent to draw light upon the CCP devised in the United States of America (USA). Antitrust laws in the USA are regulated by two agencies namely, the Federal Trade Commission’s (FTC) Bureau of Competition and the U.S. Department of Justice Antitrust Division. According to these agencies, a sound antitrust compliance program should have two principal objectives, prevention and detection.

These agencies state that a corporate compliance program generally does not protect the enterprise from prosecution neither does it protect it from potential liability. Therefore, every enterprise’s first objective in its compliance program should be to prevent wrongdoing. A well-designed compliance program may also, in some circumstances; help the enterprise qualify for sentence mitigation under the sentencing guidelines of the agencies. But it may be relevant to stress upon the fact that once a violation occurs, a compliance program can do little, if anything, to persuade the Antitrust Division of the U.S. Department of Justice not to prosecute.

The U.S. sentencing guidelines set down seven minimum requirements that a compliance program must satisfy in order to qualify for sentence mitigation. These are, clearly established compliance standards, assigning overall responsibility to oversee compliance to high-level executives within the company, exercising due care not to delegate responsibility to employees who have a propensity to engage in illegal conduct, taking reasonable steps to communicate standards and procedures effectively to all employees, taking reasonable steps to achieve compliance with standards, consistent enforcement of standards through appropriate disciplinary mechanisms, and taking reasonable steps when an offense occurs to respond and to present future violations.

It has been further stated by the agencies that culture of competition must be inculcated at the top management level of the company. Senior management must value competition and must be vocal in making that commitment known to employees. In addition to strong, positive leadership, it is important also that an enterprise should have sound incentive structures in place. There should be strong negative incentives against violating the antitrust laws and strong positive incentives for reporting and deterring violations. But enterprises should also have incentives that reward tough competition, not collusion.

Lastly, it would be relevant to take a look at the guidelines issued by the European Commission (EC) to devise a sound CCP for the enterprises in the European Union countries. According to the EC, the risks of non compliance of competition laws are employment sanctions, criminal sanctions, actions against the plan, large civil damage awards, disclosure of confidential commercial information, loss of time and business losses.

The EC further stresses upon the importance of a compliance officer in every enterprise and his duties. EC states that the compliance officer has an overall responsibility for ensuring compliance with the enterprise’s anti-competition policy. Potential violations of the anti-competition policy or the anti-competition laws should be reported to such officers and the officer has a duty to take it up to the senior management.

Conclusion

After looking into the CCP guidelines laid down by the various jurisdictions including India, it may reasonably concluded that a well planned and exhaustive CCP would be beneficial to all enterprises irrespective of their size, area of operation, jurisdiction involved, nature of products supplied or services rendered. Such a CCP would also facilitate the enterprise to make better use of the Authorities in taking remedial action if it is affected or likely to be affected by any anti-competitive behavior of its competitors. It may be suggested that enterprises need to undertake review of their marketing arrangements, market position and policies, restructuring , if any, in the pipeline so that they can take timely corrective measures or align their policies conforming to new competition regime.

Author: Priyanka Mokashi, Fifth Year

Symbiosis Law School, Pune

The Directors of a Company act as agents of the Company and enter into contracts and arrangements on behalf of the company. Sometimes, in the course of such transactions, the Directors may have some personal interest in the transactions to be entered into by the company. Since they occupy such a key position requiring trust and utmost good faith, the Companies Act, 1956 has laid down extensive provisions to prevent the misuse of rights and powers by the directors. The object of these sections is to bring into the knowledge of the Board of directors, the extent of the interest of a director, in any contract proposed to be entered with the company by the Director or any of his specified associates.

Before applying the provisions of the Companies Act, 1956 (hereinafter referred to as the Act) it is pertinent to understand the concept of an interested Director.

A director is said to be an Interested Director if the party to the contract is

· A director of the company

· Relative of any director

· A firm in which the director or his relative is a partner

· Any other partner in such a firm

· A private company in which such a Director is a member or a Director.

PROVISIONS IN THE ACT

SECTION 299

Section 299 of the Companies Act, 1956 provides for Disclosure Of Interest By Directors.

It states that any director who is in any way interested, directly or indirectly in a transaction or arrangement to be entered into by the company shall disclose the nature of his interest in a meeting of the Board of Directors of the Company.

The section also states that a director who fails to comply with the section shall be liable to pay a fine upto fifty thousand rupees. The contravention of the section also results in automatic removal from the office of the director, not requiring a resolution by virtue of Section 283(1)(i) of the Act.

MODE OF DISCLOSURE

In the case of a proposed contract or arrangement, the disclosure shall be made at a Meeting of the Board of Directors or if the director was not, at the date of the meeting, concerned or interested in the proposed contract or arrangement, at the first meeting of the Board held after which he becomes so concerned or interested. In case of any other contract, the required disclosure shall be made at the first meeting of the Board held after the directors becomes concerned or interested into contract or arrangement.

Sub- section (3) provides that a general notice has to be given to the Board by a director, to the effect that he is a director or a member of a specified body corporate or is a member of a specified firm and is to be regarded as concerned or interested in any contract or arrangement which may, after the date of the notice, be entered into with that body corporate or firm, shall be deemed to be a sufficient disclosure for the purpose of sub-section (1) and (2) in relation to any contract or arrangement so made.

It has been further provided that such notice has to be renewed every financial year and it is the duty of the concerned director to ensure that such general notice or renewal thereof is brought upon and read at the first meeting of the Board after it is given.

However, it is pertinent to point out that the Act does not prohibit the company to enter into transactions in which the director is interested. It only casts a duty upon the director to make disclosure of his concern or interest as provided in the section. Failure to make the required disclosure renders the director liable to punishment, and gives an option to the company to avoid the contract, but does not make the contract illegal, unenforceable or void.

Sub-section (6) of Section 299 provides that disclosure of interest is not required where one, or more Directors of one company does not hold or holds not more than two percent of the paid up share capital in other company.

However, it is pertinent to point out the practical difficulty in this regard :

It is seen that without knowing the extent of the interest of all the other directors in the company concerned, it would not be possible for a Director to know whether the collective holding of himself and his colleagues was less than 2 per cent.

Although the object of sub section (6) is that the Directors would not be required to give even a general notice of interest when their interest in the company, which would otherwise have to be declared, was less than 2 percent. However, in practice the position remained that Directors could be certain of complying with the section only if they gave a general declaration of their individual interest in any other body corporate, whatever the extent of that interest.

The Act has also outlined provisions like Section 297, 300 and 301 which further ensure that the personal interest of the director is not prejudicial to the interests of the Company.

SECTION 297

The object of Section 297 of the Act is that the Board of Directors should have knowledge of the extent of interest of a director in any contractual dealings with the company, or of any person connected with the director in any of the ways mentioned in section 299(1), and accord their consent to such dealings. The consent contemplated is not a general consent but consent referable to each particular or specific contract.

Section 297 lays down the following contracts which require prior approval of the Board:

i) Sale, purchase and supply of goods, materials and services

ii) Underwriting the subscription of any shares or debentures of the company.

In companies with paid up capital of Rupees 1 crore or more, prior approval from the Central Government is required for entering into contracts covered under section 297.

Although the prior approval of Board of Directors is required under section 297, a relaxation under sub-section (3) of section 297 has been provided. In cases of urgent necessity, prior approval of the Board is not required but the consent should be obtained within three months by a resolution passed in the board meeting. This relaxation shall not apply to companies which require prior approval of the Central Government.

In a situation where the Board does not have a quorum of disinterested directors, the contract shall be approved by the shareholders in General Meeting.

CONSEQUENCES OF FAILURE

Failure to obtain the Board’s consent will make a contract voidable at the option of Board of Directors. The contract shall become void only when the Board of Directors avoids it. Also, if the Central Government’s approval is required, failure to obtain the same would render the transaction void.

EXEMPTIONS UNDER SECTON 297(2)

The prior consent of the Board will not be required in the following circumstances:

i) Contract for purchase of goods from the company or sale of goods to the company, which are for cash at prevailing market prices.

ii) Contract for sale or purchase of good or services in which the party regularly does business but upto Rs. 5000 in a year during the period of contract.

iii) Any transaction of the Banking/Insurance company in the ordinary course of business of such company with the specified persons.

SECTION 300

Further, Section 300 ensures that an Interested Director is not allowed to participate or vote in Board’s proceedings. The Act also anticipates the unnecessary inconvenience in this regard and provides that such a restriction would be applicable only if the combined holding of all the directors is more than 2 percent of the shareholding of the company.

Voting by an interested director will make a contract void in the following two cases if the exclusion from quorum would have resulted in ‘no quorum’ or if exclusion of his vote would have resulted in failure of such resolution.

IF INTERESTED DIRECTORS EXCEED NON INTERESTED DIRECTORS

Since the provisions of Section 300 cannot be disregarded on the ground that number of interested directors exceed that of non interested directors

The following alternative options may be adopted:

1. The difficulty in getting required quorum at the Board Meeting can be solved by increasing the strength of the Board of Directors or co-opting new members, if so authorised by the Articles.

2. Summon and get the approval of a general meeting by means of an ordinary or special resolution as the case may require, in conformity with the provisions, if any, in the Articles of the company.

3. If there is a provision for appointing additional directors, a sufficient number of additional directors may be appointed so as to have a quorum of independent directors.

The restriction under Section 300 is not applicable to private companies. Further, this restriction is not applicable in case of a private company which is a subsidiary of a holding company, enters into a contract with the holding company or contracts in a public company where the interest of the directors does not exceed 2 percent of the paid up share capital of the company.

SECTION 301

Section 301 embodies the principle of transparency and provides for maintenance of a Register of contract which includes all arrangements and contracts entered into by the company in which the directors are interested. Such contracts or arrangements are to be entered into within 7 days of meeting of the Board or approval of the Central Government. The register would be kept at the registered office of the company and will be open to inspection by any member of the company.

The Register has to contain the following particulars

· date of the contract,

· date on which it was placed before the Board,

· names of the parties,

· terms and conditions of the contract,

· names of directors voting for and against and remaining neutral

REGISTER OF CONTRACTS HAS TO BE MAINTAINED EVEN THOUGH SECTION 299 IS NOT APPLICABLE

Section 301 deals with the maintenance of the register of contracts in respect of the contracts to which either Section 297 or 299 is applicable. The mere fact that one of these sections is exempted from application in a particular case does not ipso facto lead to an exemption of Section 301. The register of contracts has to be maintained as required by Section 301 if the requirement of Section 297 is attracted even though the requirement of Section 299 is not applicable.

A Global View

The boundaries between marriage and cohabitation are being debated intensely across the globe. Since 1999, unwed couples have received legal recognition in France. In Scandinavian countries, being unmarried is increasingly the norm. In Italy, a law for the first time grants some legal recognition to such couples. Article 147, of the Family Code, Philippines provides that when a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.

Prevalent Norms

India, however, is known for its moral and traditional values. According to age old Indian ethics, man and woman are not allowed to live together unless they are married. Indian culture still perceives live-in relationship sacrilegious. For decades, laws in India have displayed an unwillingness to enter the private space between men and women. Not surprisingly, Indian laws are hardly ready to address this issue. The entire gamut of laws, the personal laws like Hindu Marriage and Adoption Act, besides some other harassment laws—nothing recognises live-in relationships

The attitude of the court had also been negative. Various High Courts across the country have opined that a presumption of marriage in law arises only when the factum of marriage is proved or some evidence has been established to prove the fact of performance of a marriage function. Some of these are: Narayanamma v. Suryapandurangappa, (1969) Deivanai Achi v. Chidambaram Chettiar, (1954), Yamunabai v. Anantrao,(1988), Sumitra Devi v. Bhikan Choudhary, (1985) .

In Gokul Chand v. Parvin Kumari, (1952), the Apex Court held that a petition under S.125, Cr.P.C. is maintainable at the instance of the wife only when she establishes that she is the wife. A concubine is not entitled to file a petition under S125, Cr.P.C. of maintenance against her paramour.

Modern societies face modern challenges

Live-in relationship, in its present form, is new to India. Some claim that the culture has reached India from Western shores. Some cities like Delhi, Mumbai, Pune and Bangalore already have a huge population of youngsters in live-in relationships. Besides these big cities, the trend has caught on at other places, as well. These young men and women who are away from home without any family or local guardians fall back on such arrangements due to circumstances. Apart from emotional support, they get to pool up finances for accommodation. There will also be some savings as the expenses are shared between the two people. Besides, help is always available in case of any distress. The far and wide bridge that existed between Indian marriage system and western world until recently is slowly dwindling. Such arrangement seems to be the growing need of the day.

A Quick Reminiscence

Gujarat for a long time had Maitri Karaar or a ‘friendship contract’ entered into voluntarily between a man and a woman, which decreed that the woman would exercise no claim on the man during or after the relationship beyond ‘friendship’. The man in such relationships was always married while the woman was single and most often responsible for the upkeep of her parental family. As she knew that she could never marry, she and her family willingly consented to such a contract because this was the only way she could enjoy a physical relationship with a man. It offered the married man a convenient plea to take on a mistress without the responsibilities incumbent upon a husband. The signed contract specified the period of liaison and had sub-clauses like neither of them having any claim to the other’s property. Children were not usually a part of this relationship. But at the end of the day, it was the woman who bore the brunt when the man went back to his legally sanctioned family. In many cases, he kept his links with both, his Maitri Karaar ’friend’ and his legally wedded wife.

The Domestic Violence Act covers Live-in relationships

No law, presently, deal specifically with the concept of live-in-relationships and their legality. Still, under The Protection of Women from Domestic Violence Act, 2005, all benefits are bestowed on woman living in such kind of arrangement by reason of being covered within the term “domestic relationship” under Section 2(f). The Domestic Violence Act provides protection to women at the hands of their husbands as well as live-in partners, and his relatives. When the law came into force in October 2006, it did not distinguish between the woman who is married and the woman who is in a live-in relationship.

It is the only Central act, which goes beyond traditional relationships under which a live-in partner has equal rights as a wife and can claim shared residence, maintenance and compensation, protection against abuse. The Act is very wide in its scope and includes economic abuse as well. If any economic assistance that is entitled to the aggrieved is denied, that also constitutes domestic violence. In fact, the Act also includes emotional abuse. But the Domestic violence Act just provides protection it does not give social and legal legitimacy to a live-in partner.

Changing views: Recommendations & Proposals

The Malimath Committee was formed by the Centre to suggest reforms in the Cr.P.C. Justice Malimath Committee’s recommendation to the Law Commission of India in 2003 states that if a woman has been in a ‘live in’ relationship for a reasonable period, she should enjoy the legal rights of the wife.

In June, 2008 in response to recommendations made by the Ministry of Women and Child Development, the National Commission for Women (NCW) sought a change in the definition of ‘wife’ as described in Section 125 of the Criminal Procedure Code (Cr.P.C), which deals with maintenance. The NCW recommended that women in live-in relationships should be entitled to maintenance if the man deserts her.

On 8th October, 2008 the recommendation of the Malimath Committee was accepted by the Maharashtra government. Taking forward its decision to give some sanctity to live-in relationships and ensure that women in such relationships are not taken for a ride, the Maharashtra government proposed to amend Section125, Criminal Procedure Code (Cr.P.C) and expand the definition of the word ‘wife’ to include a woman living with a man like his wife for a ‘reasonably long’ period.

If the government walk the talk, it would allow the woman in such a relationship to be entitled to alimony if the relationship breaks down as it legalises a live-in arrangement. Of course, it would need the Centre’s stamp of approval before it can become a law. Since the CrPC is in the concurrent list, the state cabinet proposal has been sent to the Centre for obtaining the President’s assent.

However, Debate in the Lok Sabha On 15th December, 2008 in the question hour, Mr.H.R.Bhardwaj, Union Law Minister (as he then was) while answering to the question related to live-in-relationships said that if live-in- relationships are acceptable by society, then the government can make laws. Laws are made keeping in view societal trends. It is hypothetical to ask a question whether we are contemplating a law to govern live-in relationships. Less than one percent of the people are in such relationships. If a law is enacted, it will only be misused.

Judicial Trend

As early as 1927 in Dinohamy v. WL Blahamy the Privy Council, laid down that where a man and a woman are proved to have lived together as a man and wife, the law will presume, unless the contrary be clearly proved, that they were living together in consequence of a valid marriage and not in a state of concubinage.

The Council made significant additions to the 1927 ruling in 1929 in Mohabhat Ali Vs Mohammad Ibrahim Khan. It said: “The law presumes in favour of marriage and against concubinage when a man and woman have cohabited continuously for a number of years.” For a live-in couple to be considered validly married, the court wanted evidence of cohabitation for a number of years, without specifying the minimum number of years.

In Badri Prasad v. Dy. Director of Consolidation and Ors. (1978), the Supreme Court recognised a live-in relationship as a valid marriage, accusing the authorities of questioning a relationship 50 years after the couple had begun living together, and were treated as a married couple even by their relatives.

In a path-breaking judgement of Payal Sharma Vs Superintendent, Nari Niketan, and others, in which a court stated in 2001 that a live-in relationship was not illegal. The Allahabad High Court on 4th March 2002 came up with a bold judgment by stating that anyone, man or woman, could live together even without getting married if they wished.

In Koppisetti Subbharao Subramaniam Vs. State of A.P., the Supreme Court extended the protection against dowry under Section 498 A of the Indian Penal Code to women living in such relationships. It said that ‘the nomenclature “dowry” does not have any magical charm written over it. It is just a label given to a demand of money in relation to a marital relationship’. Drawing parallels with the law which recognises the legitimacy of children born of void and voidable marriages, it explained its stand asking: “Can a person who enters into a marital agreement be allowed to take shelter behind a smokescreen to contend that since there was no valid marriage, the question of dowry does not arise?” This judgment seems to go a long way in saying that men can’t dodge either responsibility or liability to women they live with by simply not getting married to them.

In January 2008, the Supreme Court validated long-term live-in relationships as marriages. A Supreme Court bench headed by Justice Arijit Pasayat with P Satasivan declared that children born out of such a relationship will no longer be called illegitimate.

The recent ruling in Abhijit Bhikaseth Auti v. State of Maharashtra and Anr. is only the latest in a series of recommendations by various bodies seeking equal rights for the married woman and live-in female partner.

Conclusion

On one hand when the judiciary is redoing its liberal face with the recent ruling of Justice Oka of Bombay High Court and Delhi High Court’s decision in Naz Foundation v. Government of NCT and Ors., (2009) to recognise same sex relationships, the need for a legal provision is felt to secure the future of a child born from a relationship which has not taken the shape of marriage.  The Hindu Marriage Act, 1955 gives the status of a legitimate child to every child whether result of void, voidable or valid marriage. However, a legal provision is required to grant property and maintenance rights. The child is entitled to get a share in the property of both the father as well as the mother who may decide to move out of the live-in arrangement.

The recognition of the live-in relationship would allow a ‘mistress’ to get the status of a legally married wife in all matters, including share in property, inheritance, maintenance. Nevertheless, this essentially goes contrary to the Hindu Marriage Act, 1955, which has no provision for a second wife among Hindus. Moreover, once live-in couples invoke the proposed amended law, it would mean an admission on their part that there is a ‘second wife’ - which is again not permitted as per the Hindu Marriage Act, 1955.

Further, the judiciary, the Malimath Committee Report and the Maharashtra government’s proposal are all fuzzy on the duration of cohabitation. Since the term “reasonably long” period of live-in relationship in the proposed law has not been quantified, it is left open to varied interpretation.

The very idea of cohabitation is that the partners don’t want commitments and responsibilities that come with marriage. In that case, we cannot expect social and legal bond to a relationship that by definition can be terminated at will. Any decision to bring change in Section 125, CrPC with regard to live - in - relationship invites amendments in other laws as well including law of evidence, succession, adoption, bigamy, marriage etc. Therefore, if even inspite of no relationship in the eyes of law (marriage), one has to be made liable to pay maintenance after a reasonable time period.

By

Apala Ray

Nakul Kohli

Nakul Arora

The Banks have a contractual duty towards their customer which creates a fiduciary relationship between the bank and the customer whenever they act as agents, trustees or depositees of the customers.

In the case of Bhita Co-operative Development and Cane Marketing Union Ltd. v. Bank of Bihar the court held that in case of any fraud perpetuated against the customers account through the bank, if the act is due to the negligence of the customer, then the bank is not held liable for the same. But if the bank is negligent in exercising due care imposed upon it to verify genuinity of the documents provided to the bank, then in case of a fraud, the bank is considered liable for the same and the client cannot be debited with any payment made by the bank on such documents.

The mutual funds, as per the Regulations are set up as trusts and hence have a fiduciary duty towards their investors. Trustees assume the fiduciary responsibility to ensure that affairs of mutual fund are conducted in accordance with the regulations and that the interests of investors are protected. These MFs are supposed to deal with the funds of the investors with utmost care, avoid any unsound investments and buy assets for their unit holders at the best possible price. Thus they have been vested with a duty to care and any breach in such duty which causes any injury or loss to the customer would make them liable for compensation and damages.

While laying down the rights and obligations of the Trustees, the Regulation mentions that code of ethics laid down to govern the Trustees must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions.

The said Regulation with the aim of investor protection pin the liability on the Mutual Funds in case of any default in complying with its provisions. Therefore any Mutual Fund, which indulges in unfair trade practices in securities, shall be dealt with in the manner provided under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002. Unfair Trade Practices include fraud, which has been further defined under the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 1995 (which is similar to its definition under Section 17 of the Indian Contract Act, 1872) as:

2 (c) “fraud” includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his agent, or to induce him to enter into the contract:

(1) the suggestion, as to a fact, of that which is not true, by one who does not believe it to be true;

(2) the active concealment of a fact by one having knowledge or belief of the fact;

(3) a promise made without any intention of performing it;

(4) any other act fitted to deceive;

(5) any such act or omission as the law specially declares to be fraudulent;

and “fraudulent” shall be construed accordingly.

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

The Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 provide that in case of any contravention or default by the Mutual Fund of any provisions of the said Regulations, SEBI may suspend or cancel the license of the Mutual Fund along with further actions.

The current position of the courts regarding the liability of Mutual Funds in case of potential or alleged frauds is illustrated by the following cases:

1. Indian Bank Mutual Fund and Ors. v. Securities and Exchange Board of India MANU/DE/2648/2006

In the abovementioned case, the Delhi High Court quashed an order of the SEBI and Central Government (Appellate Authority) issued under the Section 11B of the Securities and Exchange Board of India Act, 1992 (“Act”) against the Mutual Fund on looking into the matters of the said Fund and discovering that it had complied with all the statutory regulations and when it found that the public had not been mislead by the said fund.

2. The Chairman, SEBI v. Shriram Mutual Fund and Anr. AIR 2006 SC 2287

In the instant case, the respondent a Mutual Fund had failed to comply with terms and conditions attached to Certificate of Registration which were statutory in nature. The Hon’ble Supreme Court held that where once it is conclusively established that mutual fund had violated terms of Certificate of Registration and the statutory Regulations, imposition of penalty becomes a sine qua non. But before the penalty is imposed, the contravention by the Mutual Fund has to be established, even though the intention of the party in the matter may be completely irrelevant.

The above case laws exhibit the current trend of regulatory bodies and courts in India. Though the Board tends to lean towards the investors, it is quite settled on the point that every case shall be looked into individually and decided on the basis of the facts of the same. The courts have held that the provisions laid down in the said Act and said Regulations have to be followed while investigating any Mutual Fund or other Financial Body regulated by SEBI and before issuing necessary directions to them.

The RBI through its Master Circular on Frauds: Classification and Reporting which has been revised through the Circular No. DNBS.PD.CC. NO. 149/03.10.042/2009-10 Dated 1-7-2009 to include NBFCs in its purview, lay down the provisions for reporting of frauds to the RBI and other law enforcement agencies for quick and efficient action to be taken against the perpetrators of the offence. The circular classifies different types of fraud as per the provisions of Indian Penal Code, 1860 and provides for setting up of a Special Committee to monitor and review frauds. The Reporting has to be done to the RBI in an FMR-1 form, which requires all the details of the bank which was defrauded to be given along with the details of the person committing the fraud (viz. Staff, Customers or Outsiders). Further the status of actions taken by the financial institution against the perpetrators has to be included.

Hence the current perspective of the courts and other adjudicating authorities in India regarding the liability of Mutual Funds, Banks and other financial institutions in case of a fraud on investor’s or customer’s account is as follows. The authorities in India will not impose a strict liability on the Mutual Funds or the Banks in case of a fraud. In every case of alleged or potential fraud, the courts will look into the matter at hand separately and after forming a complete picture, impose liability on the party that has been negligent. If the Mutual Funds or the Banks have been negligent and the said negligence has led to a breach in duty to care which lay upon such Mutual Funds or Banks and which caused any injury or loss to the customer or investor then they will be considered liable for the same. Moreover if an employee or member of the staff of the Bank or Mutual Fund acting in his official capacity is responsible for such fraud, then they will be vicariously liable for the acts of their employees or agents.