Saturday, October 26, 2019

Requirements of a Representative Suit and Suits against Government


I have written before on the essential requirements of institution of a representative suit under Order 1, Rule 8. I recently came across two judgements of the Supreme Court which shed more light on its nuances and scope. The first one was delivered in 1963 and the second in 1990.

In the first judgement, the issue before the Court involved a combined interpretation of Section 80 of the CPC (suits against Government) and Order 1, Rule 8. In this case, two individuals issued a notice under Section 80 to the then State Government of Madras notifying the Government of their intention to the sue it and also highlighting the fact that their notice was on behalf of other individuals with similar grievances as them. While the notice did not identify all such individuals, it clearly identified the grievance, the cause of action, names and places of residence of the two individuals issuing the notice and the reliefs sought. Out of the said two individuals, however, only one of them finally sued the Government.

The Government objected to the maintainability of the suit on the ground that (a) the Section 80 notice was not in accordance with the law since it failed to specify the particulars of all individuals who had such a grievance; (b) that before issuing the Section 80 notice on behalf of others their consent was not sought; and (c) that only one of the “noticers” finally sued the Government instead of both of them, which according to the Government was not in accordance with Order 1, Rule 8.

The Supreme Court held that as long as the Section 80 notice clearly identified the grievance along with the particulars of the issuers of the notice and the reliefs claimed, and had a statement to the effect that the notice was representative in nature, the fact that it did not specify the details of other aggrieved individuals did not affect the legality of the notice. The Court also clarified that the consent of the other affected parties was not needed to issue a Section 80 notice on their behalf and categorically rejected the argument that the leave of the Court was needed even before issuing the Section 80 notice.

Keeping with this logic, the Court further held that it was not necessary to seek the permission of all affected parties to sue on their behalf under Order 1, Rule 8 since such permission to sue in representative capacity was, in any case,  to be sought from and granted by the Court to the Plaintiff upon institution of the suit. The Court reasoned that since the provision itself envisaged issuance of a public notice by the trial court to similarly placed individuals/parties at the expense of the Plaintiff, there was no need for the Plaintiff to seek permission from such parties prior to the institution of the suit. The Court also pointed out that there was nothing either in Section 80 or in Order 1, Rule 8 which mandated institution of the suit by everyone who issued the Section 80 notice in order for the suit to be maintainable.

In the second judgement, delivered in 1990, the case involved demands for additional payments issued by the State Housing Board of Tamil Nadu to allottees of housing units. When a representative suit was instituted by the one of the allottees, the State Government objected to its maintainability on the ground that a representative suit could not be filed against monetary claims since the claim amounts would differ from person to person, and that the demand made to each person would give rise to a separate cause of action, thereby precluding the application of Order 1, Rule 8. 

The Apex Court dismissed these contentions on the ground that there was nothing in Order 1, Rule 8 which precluded its application to any class of claims or actions. Importantly, the Court reiterated the position that the fundamental basis of a suit under the provision was a commonality of interest, which in itself would arise from the nature of the cause of action notwithstanding the differences in the quantum of claims. In other words, it could either be argued that the cause of action i.e. the demand for payment, need not be the same for Order 1, Rule 8, or it could be argued that the cause of action in such a case would be the broad fact that similar demands were issued to similarly placed parties/individuals. The net result would be the same.

The following extracts from the judgement capture the position with great clarity:

The provisions of Order 1 of Rule 8 have been included in the Code in the public interest so as to avoid multiplicity of litigation. The condition necessary for application of the provisions is that the persons on whose behalf the suit is being brought must have the same interest. In other word,s either the interest must be common or they must have a common grievances which they seek to get redressed.

In Kodia Goundar and Another v. Velandi Goundar and others, |LR 1955 Madras 339, a Full Bench of the Madras High Court observed that on the plain language of Order 1, Rule 8, the principal requirement to bring a suit within that Rule is the sameness of interest of the numerous person on whose behalf or for whose benefit the suit is instituted. The Court, while considering whether leave under the Rule should be granted or not, should examine whether there is sufficient community of interest to justify the adoption of the procedure provided under the Rule. 

The object for which this provision is enacted is really to facilitate the decision of questions, in which a large number of persons are interested, without recourse to the ordinary procedure. The provision must, therefore, receive an interpretation which will subserve the object for its enactment. There are no words in the Rule to limit its scope to any particular category of suits or to exclude a suit in regard to a claim for money or for injunction as the present one.

8. Coming to the relevant circumstances in the present case it will be seen that all the allotments in Ashok Nagar were made under the same Scheme and all the relevant facts are common. The basis of the impugned demand of the appellant is equally applicable to all the allottees and the plea of the plaintiff is available to all of them. The trial court was, therefore, perfectly right in permitting the plaintiff to proceed under Order 1, Rule 8 of the Code of Civil Procedure. Nobody in this situation can complain of any inconvenience or injustice. On the other hand, the appellant is being saved from being involved in unnecessary repeated litigation.

9. It is true that each of the allottees is interested individually in fighting out the demand separately made or going to be made on him and, thus, separate causes of action arise in the case, but, that does not make Order 1. Rule 8 inapplicable. Earlier there was some doubt about the Rule covering such a case which now stands clarified by the Explanation introduced by the Code of Civil Procedure (Amendment) Act, 1976, which reads as follows: "Explanation--For the purpose of determining whether the persons who sue or are sued, or defend, have the same interest in one suit, it is not necessary to establish that such persons have the same cause of action as the persons on whose behalf, or for whose benefit, they sue or are sued, or defend the suit, as the case may be."

The objects and reasons for the amendment were stated below: "OBJECTS AND REASONS: Clause 55; sub-clause (iv),--Rule 8 of Order 1 deals with representative suits. Under this rule, where there are numerous persons having the same interest in one suit, one or more of them may, with the permission of the Court, sue or be sued, on behalf of all of them. The rule has created a doubt as to whether the party represent- ing others should have the same cause of action as the persons represented by him. The rule is being substituted by a new rule and an explanation is being added to clarify that such persons need not have the same cause of action." There is, therefore, no doubt that the persons who may be represented in a suit under Order 1, Rule 8 need not have the same cause of action."

Friday, May 24, 2019

Section 13 of the Evidence Act- Part II

In the last post, I had discussed the judgement of a Full Bench of the Calcutta High Court delivered in 1880 on Section 13 of the Evidence Act. In stark contrast to the ratio of the majority of the said judgement, in The Collector Of Gorakhpur vs Ram Sundar Mal (1934) and in judgements before that, the Privy Council and the Calcutta High Court took the view that a judgement which is not inter partes is still admissible as a transaction within the meaning of Section 13 in a subsequent proceeding. Extracted below is the relevant portion of The Collector judgement:

“The question whether statements in judgments and decrees are admissible under Section 13 read with Section 43 is elaborately discussed by Sir John Woodroffe in his new edition of the Evidence Act(1931), p. 181 et seq. He would hold that they are not admissible at all under Section 13 ; but this view is not in accordance with the decisions of the Board in Ram Ranjan Chuckerbutty v. Ram Narain Singh(1894) L.R. 22 I.A. 60 and Dinontoni Chowdhrani v. Broja Mohini Chowdhrani (1901) L.R. 29 I.A. 24 : S.C. 4 Bom. L.R. 167. At the bottom of p. 194, however, the learned author treats judgments as evidence of admissions by ancestors. There are great difficulties about Section 13, but Dinomoni's case is express authority for the proposition that " on general principles and under Section 13 " orders made under the Criminal Procedure Code are admissible for the purposes mentioned in the passage quoted at p. 191 from the Board's judgment.”

This position was reiterated by the Supreme Court in Shrinivas Krishnarao Kango vs Narayan Devji Kango And Others (1954), and in Sital Das vs Sant Ram And Ors. (1954), wherein the Court held as follows:

We agree with the High Court that in the absence of any evidence to show as to who propounded this pedigree which the Subordinate Judge acted upon, it is not possible to say that it was an admission by Kishore Das through whom Ishar Das lays his claim and consequently the pedigree would not be an admission relevant under section 21 of the Indian Evidence Act. But the judgment itself, we think, can be received in evidence under section 13 of the Evidence Act as a transaction in which Kishore Das, from whom Ishar Das purports to derive his title, asserted his right as a spiritual collateral of Mangal Das and on that footing got a decree. The decree also recognised the right of Kishore Das to institute the suit as such collateral. We think therefore that the judgment could be received in evidence and although it is not by any means conclusive and has got to be weighed and appraised for what it is worth, it can be used in support of the oral evidence adduced in the case. It is to be noted that this part of the plaintiff's story was not challenged by the defendants in their evidence at all. In our opinion therefore on the evidence on the record it is fully established that Sital Das was a spiritual collateral of Kishore Das.”

While these judgements were endorsed again by the Supreme Court in Tirumala Tirupati Devasthanams vs K.M. Krishnaiah (1998), which appears to have continued even until 2015 in K. Nanjappa (D) By Lrs vs R.A. Hameed @ Ameersab (D)By Lrs., a much more nuanced opinion emerged in 1983 in State of Bihar vs Radha Krishna Singh & Ors. which was delivered by a three-Judge Bench. Here are the relevant portions of the said judgement, which I will deal with:

“…it is well settled that judgments of courts are admissible in evidence under the provisions of sections 4041 and 42 of the Evidence Act. Section 43 which is extracted below, clearly provides that those judgments which do not fall within the four corners of sections 40 to 42 are inadmissible unless the existence of such judgment, order or decree is itself a fact in issue or a relevant fact under some other provisions of the Evidence Act:-

"43. Judgments, etc., other than those mentioned in sections 40 to 42, when relevant- Judgments, orders or decrees, other than those mentioned in sections 4041 and 42, are irrelevant, unless the existence of such judgment? order or decree is a fact in issue, or is relevant under some other provision of this Act."

Some Courts have used section 13 to prove the admissibility of a judgment as coming under the provisions of s. 43, referred to above. We are, however, of the opinion that where there is a specific provision covering the admissibility of a document, it is not open to the court to call into aid other general provisions in order to make a particular document admissible. In order words, if a judgment is not admissible as not falling within the ambit of sections 40 to 42, it must fulfil the conditions of s. 43 otherwise it cannot be relevant under s. 13 of the Evidence Act. The words "other provisions of this Act" cannot cover s. 13 because this section does not deal with judgments at all It is also well settled that a judgment in rem like judgments passed in probate, insolvency, matrimonial or guardianship or other similar proceedings, is admissible in all cases whether such judgments are inter parties or not. In the instant case, however, all the documents consisting of judgments filed are not judgments in rem and therefore, the question of their admissibility on that basis does not arise, As mentioned earlier, the judgments filed as Exhibits in the instant case, are judgments in personam and therefore, they do not fulfil the conditions mentioned in s. 41 of the Evidence Act.”

The Bench also cited Fatten Lall v. Guju Lall to support its position and then quoted a Calcutta High Court judgement and another Privy Council judgement to hold as follows:

In Gadadhar Chowdhury & Ors. v. Sarat Chandra Chakravarty & Ors.(1) it was held that findings in judgments not inter parties are not admissible in evidence. In this connection a Division Bench of the Calcutta High Court observed as follows:

"Though the recitals and findings in a judgment not inter parties are not admissible in evidence, such a judgment and decree are, in our opinion, admissible to prove the fact that a decree was made in a suit between certain parties and for finding out for what lands the suit had been decreed."

This, in our opinion, is the correct legal position regarding the admissibility of judgments not inter parties, In Maharaja Sir Kesho Prasad Singh Bahadur v. Bahuria Mt. Bhagjogna Kuer & Ors.(1) the Privy Council made the following observations:

"Whether based upon sound general principle or merely supported by reasons of convenience, the rule that so far as regards the truth of the matter decided a judgment is not admissible evidence against one who is a stranger to the suit has long been accepted as a general rule in English law."

The cumulative effect of the decisions cited above on this point clearly is that under the Evidence Act a judgment which is not inter partes is inadmissible in evidence except for the limited purpose of proving as to who the parties were and what was the decree passed and the properties which were the subject matter of the suit. In these circumstances, therefore, it is not open to the plaintiff’s respondents to derive any support from some of the judgments which they have filed in order to support their title and relationship in which neither the plaintiffs nor the defendants were parties. Indeed, if the judgments are used for the limited purpose mentioned above, they do not take us anywhere so as to prove the plaintiff’s case.”

What could all this mean and is it possible to reconcile all these judgements? 

My take- In order to use a judgement under Section 13 to prove a right (public or private, corporeal or incorporeal) or a custom, reference must be made to Sections 40-43. This is because the fundamental premise of Sections 40-43, especially Section 43, is that the said provisions are self-sufficient is so far as relevancy of judgements, orders and decrees is concerned. If a judgement, which is sought to be used as evidence under Section 13, does not satisfy Sections 40-42, it can be introduced under Section 43 as being relevant only if “the existence of such judgment, order or decree, is a fact in issue, or is relevant under some other provisions of this Act”. 

The underscored portion may be misunderstood as the judgement itself being relevant under some other provisions of the Act, when in fact if the sentence is taken as a whole it reads “the existence of such judgment, order or decree is relevant under some other provisions of this Act”. This means, that the window provided under Section 43 does not deal with the admissibility of the contents of the judgement, but allows it to the limited extent of proving its existence if the existence itself is a fact in issue, or if such existence is relevant under some other provisions of the Act. In relation to Section 43, this condition needs to be satisfied in order to prevent Section 13 from being used as an omnibus backdoor to sneak in any and every judgement not inter partes as evidence which does not satisfy the requirements of Sections 40-43.

In the context of Section 13, this means, that the current position of Indian law differs from Fatten Lall v Gujju Lall, and treats even previous judgements as transactions within the meaning of Clause (a) of the said provision. However, for such judgements to be admissible as evidence as transactions, they must satisfy the requirements of Sections 40-43 which are particularly stringent when it comes to using judgements which are not inter partes and which do not relate to rights in rem. 

There’s a chance my restatements are repetitive, but the idea was to capture what I have understood, with a measure of clarity. I am not sure the law on Section 13 is settled yet. In light of what has been discussed, what is the distinction between "transaction" in Clause (a) of Section 13 and "instance" in Clause (b)? Comments and suggestions are welcome!

Monday, May 20, 2019

Proving the Existence of a Right or a Custom

How does one prove the existence of a right or a custom in any proceeding before the Court? Is there a specific provision which applies to such a circumstance? In what context does the exercise become relevant? To address these and such questions, one must look to Section 13 of the Evidence Act, 1872, which is reproduced below:

13. Facts relevant when right or custom is in question
Where the question is as to the existence of any right or custom, the following facts are relevant.

(a) Any transaction by which the right or custom in question was created, claimed, modified, recognized, asserted, or denied, or which was inconsistent with its existence;

(b) Particular instances in which the right or custom was claimed, recognized, or exercised, or in which its exercise was disputed, asserted or departed from.

Illustration

The question is, whether A has a right to a fishery. A deed conferring the fishery on A’s ancestors, a mortgage of the fishery by A’s father, a subsequent grant of the fishery by A’s father, irreconcilable with the mortgage, instances in which A’s father exercised the right, or in which the exercise of the right was stopped by A’s neighbors, are relevant facts.

Does the provision apply to inter partes proceedings/in personam rights, or does it apply only to rights which have a public or a quasi-public character? What would qualify as a “transaction” within the meaning of Clause (a)? Would a judgement, wherein the right or custom was discussed, qualify as a transaction? Or would   the judgement, or the legal proceeding where the judgement was delivered, qualify as an “instance” within the meaning of Clause (b)?

One of the earliest judgements on the provision was delivered by a Full Bench of the Calcutta High Court in 1880 in Fatten Lall vs Gujju Lall. Compared to other statutes, given that the analysis of judgements relating to the Evidence Act is even more guided by the facts of the cases they were delivered in, it becomes important to understand the backdrop in which the judgement was delivered.

In the judgement under discussion, a person X sued Y with respect to title over an immoveable property P and the issue of X’s succession from another person Z had a bearing on X’s right with respect to the property. In a previous proceeding initiated by Y against Q, it was established that X was indeed a successor of Z. Consequently, X wanted to place reliance on the judgement delivered in the previous proceeding (“earlier judgement”) in his current suit against Y on the ground that the said judgement was a “transaction” within the meaning of Section 13, and was therefore admissible. Y objected to the reliance on the judgement on the ground that it was inadmissible in evidence in X’s suit against Y since X was not party to the previous proceeding.

By 4-1 majority, the Bench held that the previous judgement was inadmissible in evidence. While the entire judgement makes for an extremely enlightening read on Sections 11, 13, 32, 40-43 and 48 of the Evidence Act, the quality of analysis in the minority and majority opinions is a treat for litigators.  

The minority opinion of Justice Mitter discussed the possibility of pegging the earlier judgement under Sections 40-42 of the Evidence Act, which deal with relevancy of judgements, orders or decrees of Court, and concluded that the earlier judgement while not attracting Sections 40-42, would certainly attract the window provided under Section 43. Section 43 provides that "judgments, orders, or decree, other than those mentioned in Sections 4041, and 42, are irrelevant, unless the fact that such a judgment, order, or decree existed is relevant under some other provision of this Act. He, therefore, concluded that the earlier judgement was relevant under Sections 11 and 13 of the Act.

According to Justice Mitter, the word transaction was wide enough to take within its ambit an earlier judgement and since there was no restriction on the nature of right or custom referred to in Section 13, it included even in personam rights. He further added that the existence of the earlier judgement was itself a relevant fact within the meaning of Section 11 since its existence would affect the fact in issue in the current suit. The fact that X was not a party to the earlier judgement did not affect its admissibility under Section 13, according to Justice Mitter. Also, he was of the view that the Indian Evidence Act did not necessarily mirror the English law of evidence in every way.

On these, the majority opinions disagreed with Justice Mitter. One of the majority opinions observed that Section 13 did not relate to the issue of ownership of property, but was limited in its application to incorporeal rights, and that a judgement was not a transaction in any sense of the word. As regards the applicability of Section 11, it was held that while the existence of the earlier judgement could be treated as a fact, the judgement in itself was not a fact but an opinion and therefore did not attract Section 11. The substance of the majority opinion is, perhaps, best expressed in the words of the then Chief Justice who was part of the Bench:

73. I suppose it must be generally acknowledged, that, with some few exceptions, the Indian Evidence Act was intended to, and did in fact, consolidate the English law of evidence.

74. The different chapters of the Act deal seriatim with the relevancy and consequent admissibility of the different kinds of evidence, and upon this principle, Sections 5 to 16 deal with the admissibility of facts, whilst Sections 40 to 45 deal expressly with judgments; and I cannot help thinking, with all deference to the opinions of those learned Judges who have expressed a contrary opinion, that if it had been really the intention of the Legislature to depart entirely from the English rule, and to make a very large class of judgments admissible here, which had never been admissible before the Act, either in England or in this country, they would have expressed their intention more plainly, by means of suitable provisions introduced into that portion of the Act which deals exclusively with judgments.

75. If there is one rule of law which is better known and approved than another, as being founded upon the most manifest justice and good sense, it is this; that (except in the case of judgments in rem and judgments relating to matters of a public nature, which are governed by a different principle) no man ought to be bound by the decision of a Court of Justice, unless he or those under whom he claims were parties to the proceedings in which it was given.”

On the intent and purpose of Sections 40-43, following were the findings of the Chief Justice:

“81Section 40, in my opinion, admits as evidence all judgments inter partes which would operate as res judicata in a second suit. Section 41 admits judgments in rem as evidence in all subsequent suits where the existence of the right is in issue, whether between the same parties or not. And Section 42 admits all judgments not as res judicata, but as evidence, although they may not be between the same parties, provided they relate to matters of public nature relevant to the enquiry.

83. It is obvious that, if the construction which the respondent's counsel would put upon Section 13 is right, there would be no necessity for Sections 4041, and 42 at all. Those sections would then only tend to mislead, because the judgments which are made admissible under them would all be equally admissible as "transactions" under Section 13, and not only those, but an infinite variety of other judgments which had never before been admissible either in this country or in England. And it is difficult to conceive why, under Section 42, judgments though not between the same parties should be declared admissible so long as they related to matters of a public nature, if those very same judgments had already been made admissible under Section 13, whether they related to matters of a public nature or not.

84. But then it is said, that Section 43 expressly contemplates cases in which judgments would be admissible under other sections of the Act, which are not admissible under Sections 4041 or 42. This is quite true. But then I take it, that the cases so contemplated by Section 43 are those where a judgment is used not as a res judicata or as evidence more or less binding upon an opponent by reason of the adjudication which it contains, (because judgments of that kind had already been dealt with under one or other of the immediately preceding sections). But the cases referred to in Section 43 are such, I conceive, as the section itself illustrates, viz., when the fact of any particular judgment having been given is a matter to be proved in the case. As for instance, if A sued B for slander, in saying that he had been convicted of forgery, and B justified upon the ground that the alleged slander was true, the conviction of A for forgery would be a fact to be proved by B like any other fact in the case, and quite irrespective of whether A had been actually guilty of the forgery or not. This, I conceive, would be one of the many cases alluded to in Section 43.”

In other words, under Section 43, a previous judgement in an inter partes dispute between two or more parties cannot become admissible in evidence against one of the parties in a subsequent proceeding involving that party and a stranger to the earlier proceeding. In the next few posts, I will continue with my discussion on Sections 11, 13 and 40-43 by referring to a few more judgements.

Friday, February 23, 2018

Towards Evolving a Culture of Damages: Analysing the Christian Louboutin Verdict of the Delhi High Court

On December 12, 2017, the Delhi High Court delivered a crisp 21-paragraph ex parte decree against the defendants in a suit for infringement of the “Red Sole” trademark instituted by the global luxury retail brand Christian Louboutin. Apart from granting injunctive reliefs to the brand owner/plaintiff against the defendants and declaring the Red Sole trademark well-known, the Court also awarded damages to the plaintiff to the tune of INR 1,63,000, and INR 8,63,790 as costs. While the judgement warrants analysis with respect to the Court’s reasons for declaring the Red Sole mark well-known, my primary interest is in understanding the Court’s approach to and basis for grant of damages and costs, an aspect of IP litigation I had discussed in brief almost two years ago.

The discussion on principles that govern award of damages begins at Paragraph 18 of the judgement, which extracts, for the most part, portions of a Division Bench’s judgement in Hindustan Unilever Limited Vs. Reckitt Benckiser India Limited (2014). The DB judgement in turn discussed the principles laid down in two English decisions, namely Rookes v. Barnard, [1964] 1 All ER 367 and Cassell & Co. Ltd. v. Broome, 1972 AC 1027. Both these English decisions, in effect, (a) clarified the object of award of exemplary/aggravated/punitive damages, (b) identified the circumstances for and condition precedents to grant of such damages so as to avoid ad hocism, and (b) diluted the vindictive/retributory character of such damages by underscoring the fact that ultimately the award benefited a private party.

While Rookes identified the categories of cases where award of exemplary damages was justified, the specifics of the considerations and their nuances were educatively articulated in Cassell. For instance, Cassell cautioned that in order to establish a case for exemplary damages, it wasn't sufficient for the plaintiff to merely peg his case under the categories identified in Rookes. Further, the first order of business in assessing damages was to compute actual or compensatory damages and then ask oneself whether such damages were adequate compensation to the plaintiff in light of the defendant’s conduct and the benefit it had accrued to the latter. Only when this question was answered in the negative, it would be appropriate for the Court to award exemplary damages.

Importantly, in assessing the adequacy of the exemplary damages and its intended deterrent character, the total sum i.e. damages inclusive of actual and exemplary components, must be considered, and not the exemplary component alone. In other words, computation of exemplary damages may be construed as an exercise in rounding off the final sum to an extent that the figure has a punitive punch to it, as opposed to a mere pinch. Clearly, these principles are meant to remind Courts of the nature and purpose of exemplary damages and temper any misplaced sense of retribution. In this regard, the clarification that damages remain a civil remedy, and not criminal, even when exemplary, is profound.

Notwithstanding the fact that the Hindustan Unilever judgement was delivered by the DB in the backdrop of a suit for commercial disparagement, the stellar principles distilled by it, with approval, from the two English decisions, lend themselves to general application to civil suits. Further, the DB’s express disapproval of the approach adopted in Times Incorporated v. Lokesh Srivastava makes Hindustan Unilever the new standard to be observed in award of exemplary damages, which is perhaps a banal observation as on date given that the judgement was delivered in 2014. One just hopes that the spirit of rigour and caution which typify this standard reflect in every suit where damages are awarded.

In the facts of the Christian Louboutin case, the Court did not award exemplary damages. Perhaps, the facts of the case did not warrant such an award, and to precisely drive home this point to the Plaintiff the Court chose to extract Hindustan Unilever. That being said, the computation of actual damages by the Court is based on quite a few assumptions, whose basis is unclear. Extracted below is Paragraph 19 of the judgement where computation of damages was undertaken by the Court based on affidavits filed on behalf of the Plaintiff:

19. As regards the relief of damages and costs, an affidavit has been filed by the Constituted Attorney of the plaintiff and considering the downloaded copies of facebook post of defendant No.5 exhibited as Ex.PW-1/28 (colly) it can safely be held that the defendants No.3 and 5 are carrying on the business in the infringing goods for at least 15 months. 23 and 22 pairs of infringing shoes have been recovered from the premises of defendant No.3 and 5 respectively which can be sought for in any given month of the year.

As per the independent Investigator, the pair of shoes from the shop of defendant No.3 was bought for ₹700/- and from the shop of defendant No.5 for ₹1,795/-. Thus, considering the turnover of defendant No.3 as ₹2,41,500/- for 15 months and that of defendant No.5 for ₹5,92,350/- and taking the margin of profit being 25% on the illegal turnover, the profit earned by defendant No.3 would be ₹15,093/- and that of defendant No.5 would be ₹1,48,088/-.”

Although this was an ex parte proceeding, perhaps the Court could have considered examining the Plaintiff’s Constituted Attorney and the “independent investigator” whose affidavits were relied upon for computation of damages. Further, since 23 and 22 infringing pairs of shoes were recovered from the premises of the Defendant No. 3 and Defendant No. 5 respectively, the Court assumed that the Defendants would have sold such numbers in any given month of the year. If only 10 infringing pairs each had been recovered, would the Court have treated these figures as the quantum of monthly infringing sales by the Defendants? The Court has also assumed the profit margin of the Defendants to be 25%, the basis for which has not been articulated in the decision. An ex parte proceeding may lack the adversarial push-back from the absent party, but that does not give the Court greater latitude with its assumptions either for or against the absent party or the party which is present. Or does it? Which takes us to a different, but important question of how does a Court render a balanced verdict in an ex parte proceeding. This is an issue I will address in a later post.

Coming back to the decision, while the DB’s exhortations on exemplary damages were perhaps not relevant to the case at hand, the underlying rigorous approach to award of damages advocated by the DB was certainly relevant, which, some might say, does not reflect in the Court’s application to the facts of the case. 

Sunday, April 2, 2017

The Shreya Singhal Judgement and Intermediary Liability: What is the Correct Legal Position?

About a week ago, on March 24, 2017, I was part of a panel discussion organised in New Delhi by the Centre for Communication Governance of NLU Delhi to commemorate the Shreya Singhal judgement. Since I led the team which challenged the intermediary liability regime on behalf of the Internet and Mobile Association of India as part of the batch of Shreya Singhal petitions, my views were sought on the actual impact of the judgement on intermediary liability regime in the two years that have passed since the verdict. In this post, I will expand on the views I expressed in the panel discussion on the legacy of Shreya SinghalOn a different note, those interested may read here the storified version of my live updates on Twitter on the arguments in Shreya Singhal.

In April 2015, I had written that while the judgement was certainly a welcome and necessary step forward in preserving the democratic nature of the internet and to ensure that unconstitutional limitations were not imposed on exercise of free speech and expression citing the nature of the medium, the Supreme Court did miss a historic  opportunity to strike a more comprehensive and nuanced position in so far as intermediary liability was concerned. This is evident from the cursory manner in which the Supreme Court dealt with the challenge to Section 79(3)(b) of the Information Technology Act, 2000 and Rule 3 of the Intermediary Guidelines, 2011. The entire discussion relating to these provisions is limited to the last six paragraphs of the decision i.e. Paras 112-118, apart from the holding in Para 119(c). The analysis of the parent provision i.e. Section 79(3)(b) itself is to be found only in Paras 116 and 117.

In Para 116, the Court observed that in contrast to the take-down mechanism under Section 79(3)(b), blocking of content on websites under Section 69A of the Act was possible (a) through issuance of a reasoned order by a Designated Officer applying the procedural safeguards provided under the Act and the 2009 Rules or (b) under the order of a competent court directing the Designated Officer to block a website or content on a website. Importantly, the Court noted that under Section 69A, unlike under Section 79(3)(b), an intermediary was not expected to adjudicate on blocking of content under the provision. This led the Court, in Para 117, to read down “actual knowledge” under Section 79(3)(b) to mean receipt of a Court order directing the intermediary to expeditiously remove or disable access to content. To this extent, the judgement provided some much-needed respite to intermediaries who were caught in the crossfire between the issuer of the notice and their users to whom they were bound by the terms of use of their portals.

However, what is pertinent is that in reading down what constitutes ‘actual knowledge’, the Court did not expressly state in its analysis that receipt of or constructive notice of a notification of an appropriate government or its agency too would amount to actual knowledge. The reference to government notification is to be found at the end of Para 117 and that too in the context of Article 19(2). Extracted below is the relevant excerpt:

Also, the Court order and/or the notification by the appropriate Government or its agency must strictly conform to the subject matters laid down in Article 19(2). Unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79. With these two caveats, we refrain from striking down Section 79(3) (b).”

Extracted below is the conclusion of the Court in Para 119(c):

“(c) Section 79 is valid subject to Section 79(3)(b) being read down to mean that an intermediary upon receiving actual knowledge from a court order or on being notified by the appropriate government or its agency that unlawful acts relatable to Article 19(2) are going to be committed then fails to expeditiously remove or disable access to such material. Similarly, the Information Technology “Intermediary Guidelines” Rules, 2011 are valid subject to Rule 3 sub-rule (4) being read down in the same manner as indicated in the judgment.”

It could be inferred, based on the language of both excerpts, that receipt of or constructive notice of a notification of an appropriate government or its agency too would amount to actual knowledge. That being said, the further observation that Orders of the Court and Government Notifications must strictly conform to subject-matters laid down in Article 19(2) and that unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79, has given rise to three different interpretations:

1.       Interpretation 1: Since Court Orders and government notifications must conform to Article 19(2), it must obviously only relate to content that attracts Article 19(1)(a). Therefore, receipt of court order or government notification as actual knowledge is a safeguard that applies only to content which falls under Article 19(1)(a). The consequence of this is that mere cease and desist notices would continue to constitute actual knowledge in relation to content which falls outside the ambit of Article 19(1)(a). This defeats the very ratio of the Supreme Court which was to not put the intermediary in the position of an adjudicator of the lawfulness of any content.

2.       Interpretation 2: Since, according to the Supreme Court, unlawful acts beyond what is laid down in Article 19(2) obviously cannot form any part of Section 79, the very applicability of Section 79 and the immunity granted thereunder to intermediaries does not extend to any unlawful act which falls outside Article 19(2). This obviously exposes intermediaries to legal action to unlawful acts which fall outside the ambit of Article 19(2) despite them playing the limited role of intermediaries.

3.       Interpretation 3: Court orders or government notifications constitute actual knowledge in all cases and in relation to all kinds of content. Where the content is relatable to Article 19(1)(a), the limitations and safeguards of Article 19(2) kick in and apply to Court orders as well as Government notifications.

In my view, the third interpretation is perhaps the most faithful to the language and intent of Section 79, as well as to the Supreme Court’s ratio behind reading down the meaning of actual knowledge and introducing Article 19(2) in the context of free speech. 

Sunday, March 26, 2017

It’s been almost a year…

It’s been almost a year since I last wrote here, and to say that this period has been “eventful” would be an understatement. After spending seven years in the profession as a litigator in a law firm (which was my first ever job), and dare I say having earned my stripes, I finally went independent as an arguing counsel late last June. These eight months of “independence” have been hectic in a good way and they have taught me quite a few things about myself and the profession.

For instance, despite having been part of a law firm setup for well over half a decade, I have come to realize that my conscious decision to not start a firm of my own and instead opt for a Chamber practice as an arguing counsel appears to have been a prudent one given that running a firm is perhaps more akin to running a business, in that it demands your attention 24*7*365. The significant managerial and administrative responsibilities that come with running a firm would have left me with little or no time to read widely and deeply on the law and outside of it on areas which interest me such as history, politics and economics, all of which I believe add to the practise of an arguing counsel. 

Importantly, the skill set needed to successfully run a law firm, I think, is very different from the one needed to be a good litigator or counsel. One perhaps needs to be a “systems” guy to manage a firm, whereas the practice of an arguing counsel is relatively more of a solo act. That’s not to say that you don’t need the support of a committed team to succeed as an arguing counsel. All I am trying to say is that there may be several gifted individuals who are capable of running a firm as well as appearing in Court day in and day out without there being a dip in their performance, but I don’t consider myself one of them. Therefore, given my love of the law and the Courtroom and my commitment to give them my all, I chose not to experiment with running a firm, and instead decided to focus on honing my craft as an arguing counsel.

The other thing I learnt was that, as an arguing counsel while you can have your areas of core competence, in India you are expected to go beyond your comfort zone(s) because after a point of time, what matters and is valued is your ability to quickly understand the broad framework of a new area of practice and the nature of the forum, assimilate the facts of a case and the issues at play, apply the legal framework to the case and articulate it in a lucid and convincing manner to the forum. In a nutshell, you can or are perhaps expected to be a jack of some and master of a few without being perceived as spreading yourself too thin. Therefore, adaptability at short notice (sometimes barely an hour’s notice) is something you pick up as an arguing counsel.

While one could go on and on, to cut a long story short, each day as an arguing counsel brings with it a unique experience and the opportunity to learn from tremendously gifted peers, regardless of which side they are on. Hopefully, I have a long way to go and don’t stop learning. I certainly hope to frequently share with the readers whatever I learn. 

Wednesday, April 27, 2016

Significance of Framing an Issue of Trademark Invalidity under Section 124 of the Trademarks Act, 1999

In the last post, I discussed the purpose and import of framing of issues in a civil suit under Order 14 of the Code of Civil procedure. I took the view that the framing of an issue under Order 14 does not tantamount to the Court taking a position with respect to the contentions of parties on a material question of fact or law. It is a mere act of charting the trajectory and contours of the trial so that the progress of the trial is not waylaid by irrelevant or immaterial issues which have no bearing on the adjudication of the rights and liabilities of the parties. 

The question that I shall address as part of this post is whether there is a difference between the framing of an issue under Order 14 of the CPC and framing of an issue with respect to the invalidity of a trademark registration under Section 124(1)(a or b)(ii) of the Trademarks Act, 1999. Under the said provision of the Trademarks Act, one of the condition precedents for the grant of a stay on a suit for trademark infringement is that a Court must form a prima facie opinion that a party’s contention regarding the invalidity of the other party’s trademark registration is tenable. Should such an opinion be formed, the Court shall raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the challenging party to apply to the IPAB for rectification/removal of the registered trademark.

This brings out the first distinction between an issue framed under Order 14 of the CPC and an issue framed under Section 124 of the Trademarks Act. While an issue under Order 14 is framed to merely identify material propositions of law or fact on which the parties differ so that the suit may be determined, an issue framed under Section 124 goes a step further because it requires the Court to form a prima facie opinion of the tenability of the contention of trademark invalidity. In other words, while under Order 14 a Court need not and cannot express its prima facie opinion on the strength of the parties’ contentions, it must necessarily do so under Section 124 on the question of trademark invalidity.

Secondly, it follows that in forming such a prima facie opinion under Section 124, the Court has to give reasons for holding in favour of either party, which is the settled law with respect to the standard of reasoning expected from prima facie findings. Although the Delhi High Court in its Full Bench decision in Data Infosys v. Infosys Technologies does not expressly endorse this view, a reading of Paragraphs 31 and 32 of the judgement reflects the Court’s implicit endorsement of the need for reasoning in assessing tenability.

Thirdly, while under Order 14 issues are framed when the stage arrives, an issue under Section 124 may be framed even before the stage of framing of issues for trial. This has been clarified by the Delhi High Court in Data Infosys. Extracted below is the relevant excerpt from Paragraph 31 of the judgement:

"31......The court is of the opinion that Parliamentary intendment is clear that if at the stage of filing of the suit, a rectification application is "pending" before IPAB, there is no choice for the court, but to adjourn the infringement suit. However, if no such application is pending, the court which is later approached with an infringement suit (which "tries" it) has to appraise prima facie tenability of the invalidity plea, whenever taken. It could be urged even by way of amendment. Nevertheless, there cannot be an automatic stay, in view of the express phraseology of Section 124 (1) (ii) which mandates exercise of discretion. To postpone the consideration at the stage of framing issues would be a narrow interpretation, undermining the broad basic distinction between the two contingencies envisioned by Section 124 (1) (b).

Finally, the consequence of an issue framed under Order 14 is vastly different from that of an issue framed under Section 124. While an issue under the former merely captures an aspect of the dispute on which evidence must be led by the parties in trial and judgement must be pronounced by the Court ultimately, an issue under Section 124 decides the very progress of the suit since if the Court does frame an issue of invalidity post a prima facie analysis, the inevitable consequence is a stay on the suit for infringement (unless the party challenging the trademark registration fails to approach the IPAB for rectification within three months from the framing of the issue).

Therefore, it is evident that not only is the object of Order 14 different from that of Section 124, the standard and rigour of analysis called for under the latter is significantly higher than the former.

In the next post, I will discuss a few more aspects of Section 124.