Towards A Global Financial Recoup—The Taxing Path

“The repose of nations cannot be secure without arms. Armies cannot be maintained without pay, nor can the pay be produced without taxes.” – Publius Cornelius Tacitus, a Roman historian

The word “tax” draws its earliest reference in a decree by Caesar Augustus, the first ruler of the Roman Empire, nearly 2000 years ago mandating taxation in all spheres of the world. The origin of the word “tax” stems from the Latin expression, “taxo” meaning, imposition of a financial charge or other levy upon a taxpayer.  India has had a system of taxation since ancient times, as is evident from references in early treatises such as Manusmriti (between 200 BCE and 200 CE) and Arthasastra (4th Century BCE). The conventional criteria of economic neutrality, equity, simplicity, and transparency have been regarded as the foundations of most tax systems. However, with the power of taxation in modern times shifting from the domain of a monarch to that of every sovereign, the regime of taxation has come to be associated with the four “R”s — revenue, redistribution, repricing, and representation. Moreover, for every benefit that mankind receives today, a tax is imposed thereby, redistributing the underlying burden.

The adoption of a flat tax has been debated by various countries in Eastern Europe over the last decade. A flat tax regime is a tax system with a constant tax rate and is usually referred to as a tax in rem, meaning “against the thing.” In 1994, Estonia became the pioneer in instituting the flat tax regime, levying a tax rate of 26% on all personal and corporate income with no deductions or exemptions. The success of the Estonian example led to the adoption of a flat tax regime by various European countries, such as Latvia, Lithuania, Bulgaria, and many others. Nevertheless, the debate continues in Western Europe and the United States.

The dawn of the global financial crisis in 2008 diverted attention to new tax regimes around the world. Rising government debt levels, reduction in bank lending, and instability in the financial markets have cast a shadow over the nascent economic recovery. Though the experiences of different countries vary, as do their priorities as they emerge from the economic crisis, none can claim to be immune from the risk of a future, and inevitably, global financial crisis.

In this respect, a universal policy cannot be imposed across various jurisdictions and each nation’s response to the crisis must be fine tuned in accordance with the assessment of their respective challenges. For example, Sweden has introduced a levy on banks that goes into a ring-fenced fund, created to protect against future bailouts. Germany and Britain are also contemplating a similar measure, and the Obama administration has proposed a levy to recoup $90 billion of public money used so far to shore up banks. However, while there is support in Europe and the United States for some form of levy, other western economies are against the concept of imposing an additional burden on their banks because they did not require rescuing.

There seems to be global recognition of the need for new taxes. The International Monetary Fund has proposed two new taxes on banks—a Financial Stability Contribution (FSC), and a Financial Activities Tax (FAT). The FSC is essentially linked to a resolution mechanism to pay for the fiscal cost of any future government support to the banking sector. Any further contribution, if desired, will be facilitated via the FAT, which would be levied on the profits and remuneration of financial institutions.

However, during the June 2010 G-20 meeting of Finance Ministers in Seoul, the proposal for a global bank tax to protect the public and ensure economic stability was rejected. A bank tax was viewed as increasing costs to consumers and requiring strict consumer and competition regulations for effective enforcement.  Rather, emphasis was put on pressuring countries to adopt more passive economic measures to recoup public funds used to protect against bank failures. Individual countries still may impose the levy in their own jurisdictions, despite the G-20’s collective recommendation. The Indian stand on additional taxation of financial institutions is similar to the G-20’s recommendation. Instead of a fiscal stimulus or additional taxation, India places greater emphasis on financial sector regulation.

Though there seems to be little support for the imposition of new taxes on banks while the economies of countries are still recovering from the global financial crisis, other new taxes are being considered in certain jurisdictions. Australia, for example, has proposed a resource tax, i.e., a tax to be levied on the “additional” profits on account of the use of limited natural resources through 2012. Moreover, the United States has proposed to levy an “excise tax” on U.S. companies that use an offshore call centres.

The levy of new taxes, apart from being viewed as a reactive measure to the global meltdown, forces one to revisit the purpose of a taxation regime. The existing regime is premised on Adam Smith’s core canons of taxation—equity, certainty, economy, and convenience. Today’s economic realities necessitate the addition of two additional principles, restitution and avoidance of double taxation. In this regard, it may be argued that the evolution of novel axes embodies, to a certain extent, the manifestation of the principle of restitution. Ian T. G. Lambert’s treatise, Modern Principles of Taxation, is founded on the principle of restitution. He argues that one cannot take the benefits of government expenditure without taking the burden. That view would justify the imposition of a bank tax or resource tax, effectively widening the scope of the existing four “R”s associated with taxes to include the principle of restitution.

India has been debating the levy of a “Tobin” Tax. The Tobin Tax derives its origin from Nobel Prize-winning economist James Tobin’s proposal to levy a tax on short-term capital currency transactions. Chile, Colombia, Brazil, and Malaysia have experimented with variations of the Tobin Tax. Various jurisdictions view this tax as compensation for the billions of dollars spent by governments to bail out banks.

India, until now, has been silent on the question of additional taxation. As the governments of various countries impose new taxes, the question is whether India will follow the same course. However, before taking this kind of leap, India must exercise caution to ensure that it does not fall prey to the dangers of an evolving short-term tax, susceptible to rapid fluctuations, and ensure that any proposed levy serves long-term stability by avoiding significant wholesale economic restructuring and facilitating the growth of business.

The authors are Mr. Aseem Chawla, Partner, and Ms. Surabhi Singhi, Associate, Amarchand & Mangaldas & Suresh A. Shroff & Co., based out of Delhi. Mr. Chawla leads the tax practice group of the firm and can be contacted at aseem.chawla@amarchand.com. Ms. Singhi is an Associate with the tax practice group of the firm and can be contacted at surabhi.singhi@amarchand.com.

 

 

by Aseem Chawla and Surabhi Singhi

Navigating The India Defense Opportunity

India is embarking on an ambitious defense and homeland security expansion plan, expecting to spend $30 billion over the next five years and upwards of $100 billion over the next decade. Considered one of the world’s fastest-growing defense markets, recently India was ranked as the world’s fastest-growing homeland security market. This growth presents tremendous opportunities for U.S. defense and technology companies in aerospace, government contracting, and homeland security. But to meaningfully participate in the India defense opportunity, one must understand and be prepared to navigate through some nuanced and complex terrains.

Understanding Procurement

Categories

First, a prospective bidder needs to understand the different procurement categories. The defense procurement categories are established in the Defence Procurement Procedure (DPP), which governs procurement by the Indian Ministry of Defence (MOD). The DPP sets out the Government of India’s (GOI) policies for every step in the procurement process, from acquisition planning to preparing requests for proposal (RFPs). Compliance with the DPP is essential to competing effectively for Indian defense contracts.

Before it was revised in 2009, the DPP provided three categories of defense procurement:

  • Buy: Outright purchase of defense equipment from foreign or Indian vendors. Programs where the purchase is made from an Indian integrator of foreign equipment must include at least 30 percent Indian content.
  • Make: Purchase of equipment from Indian vendors using indigenous development and production.
  • Buy & Make: Purchase from a foreign vendor with provisions for Indian co-production or licensed manufacturing.

In November 2009, the MOD amended the DPP and added an important fourth procurement category called “Buy & Make (Indian).” Under Buy & Make (Indian), the RFP will be issued only to Indian vendors, who in turn can decide what foreign suppliers to involve. This is intended to more effectively incentivize technology transfer and co-development in India.

Specifically, under Buy & Make (Indian), Indian firms must submit the project proposal, outline the development and production roadmap, either alone or in a production arrangement with a foreign partner, and provide details of the transfer of technology to the Indian partner. There must be at least 50 percent local content, and the Defence Production Board is responsible for monitoring implementation of the production arrangement, including absorption of technology by the Indian partner.

Buy & Make (Indian) is aimed at helping promote indigenous capabilities by driving technology transfer, joint ventures, licensed production and in-country manufacture. The MOD has not yet publicly indicated which projects will be designated Buy & Make (Indian), but for those which are so designated, Indian bidders will be in control of the process. Thus, non-Indian companies that wish to participate in this category of procurement should think ahead about identifying prospective Indian partners and crafting collaborative arrangements that can satisfy these requirements.

Complying with Agency Restrictions

There are a variety of reasons why agents may be necessary in defense and homeland security bidding. Bidders without an institutional presence in-country may believe it is particularly necessary to have third parties acting on their behalf. But one needs to proceed with caution under the Indian defense procurement rules on agency. The Indian government is particularly sensitive to the role of agents in defense procurement given prior controversies, most notably the Bofors scandal, which is considered “India’s Watergate.” As a result, there are a variety of restrictions governing the use of third party agents. Penalties for non-compliance can include disqualification from the procurement, cancellation of the contract, and debarment from future bidding.

Under the DPP 2005, parties bidding on procurements exceeding approximately $45 million are required to execute a “Pre-Contract Integrity Pact,” the express purpose of which is to ensure that, in competing for a defense contract, bidders take all measures necessary to “prevent corrupt practices, unfair means and illegal activities.” The Pre-Contract Integrity Pact requires bidders to agree to be bound by the “Agency Clause,” which provides:

Bidder confirms and declares that it… has not engaged any individual or firm, whether Indian or foreign whatsoever, to intercede, facilitate, or in any way to recommend to the Government of India or any of its functionaries, whether officially or unofficially, to the award of the Contract…

(emphasis added)

As indicated above, the Pre-Contract Integrity Pact essentially requires bidders to affirm that they have not engaged an agent. Although engaging an agent technically is not prohibited, it requires separate registration under rigorous requirements and the MOD reserves the right to reject any agent. As a result, no one has registered as an agent since the requirement was imposed in 2001. Thus, as a practical matter, for foreign companies interested in bidding for defense contracts in India, the prudent course is to ensure they do not engage any person or entity that performs any functions the nature of which require registration as an agent.

The exact meaning of the terms in the agency clause themselves are not entirely clear, and the Indian courts have not ruled on them. Nonetheless, there are some useful “do’s/dont’s” that may provide general guidance for foreign companies bidding on defense contracts in India. For example, rather than engage an entity to act as a consultant for any particular procurement program, consulting relationships should be for advice and assistance in connection with business opportunities in India generally.

Meeting Offset Requirements

Perhaps the most important issue in accessing Indian defense procurement opportunities is offsets, that is, the requirement to return to India a percentage of the value of the goods and services awarded in a defense procurement. Offsets are seen as a means to use foreign participation to foster and enhance an indigenous defense industrial base in India. It is important to know what offset requirement attaches to each procurement.

Under the DPP, procurements from foreign vendors over approximately $65 million must generally be offset by purchases or investments by the foreign vendor in Indian defense products, services, industries or research and development worth at least 30 percent of the procurement value. Offset requirements involve local purchasing, indigenous content, use of inputs, and co-production. This can be accomplished by (i) buying India defense items; (ii) buying India-defense related services; (iii) investing in an Indian defense joint venture; or (iv) investing in Indian defense research & development. Proposals are evaluated by the Defence Offset Facilitation Agency (DOFA).

Several policy issues are at the heart of the offsets discussion today. One concerns how closely offsets need to be related to the corresponding defense procurement. Currently, India’s system only credits “direct” offsets, i.e., those that are directly related to the product or service being sold. Some contend that India should also credit “indirect” offsets applied in industries outside defense, such as in commercial aerospace or homeland security. This approach would not only make it easier to meet offset requirements (and thus reduce the foreign bidder’s costs in India), but could also enable development in other areas of interest to India, such as infrastructure.

Another policy issue concerns the level of foreign direct investment, which currently is capped at 26%. Those who advocate foreign investment to at least 49% argue that providing foreign parties a greater ownership stake in Indian entities would stimulate offsets and collaboration. Specifically, in their view it would (i) incentivize foreign bidders to become more fully engaged in their India joint ventures and partnerships; (ii) spur investment as well as joint development and co-production; and (iii) motivate foreign bidders to locate strategic defense related R&D and manufacturing operations in India.

Other offset policy issues concern whether wholly-owned subsidiaries in India may qualify and whether transfer of technology can count. The India defense opportunity is not just a chance for foreign players to serve the Indian market, but is also an opportunity for Indian companies to become a key part of the global defense supply chain. So, as stakeholders focus on how to implement an effective framework for defense procurement and collaboration, both the GOI and domestic and foreign players are deliberating on what system of offsets can best serve the interests of both sides.

Managing Technology

Transfer Controls

Finally, perhaps no issue appears more vexing than U.S. export controls. If not managed effectively, it can be a deal-stopper that prevents transfer of sought after technologies. Upon arriving in Washington for their State visit and tour of duty, respectively, both Prime Minister Singh and Ambassador Shankar expressly mentioned U.S. export controls in their first remarks, underscoring the significance of this issue to U.S.-India defense trade.

India’s push for technology transfer raises significant export control compliance issues both for U.S. companies and foreign companies involved with U.S.-origin goods, software, technology and services. Specifically, the International Traffic in Arms Regulations (ITAR) restricts the transfer from the U.S. to foreign persons of defense-related technology, such as combat aircraft technology. The Export Administration Regulations (EAR) restrict the transfer of dual-use technology, i.e., that considered military useful, such as that for certain airport baggage screening systems. The ITAR and EAR often require export licenses before U.S.-origin technology may be shared with foreign persons. Those licenses can also impose ongoing export reporting and technology transfer compliance requirements. Even having meetings or making sales presentations where technical information is exchanged may constitute technology subject to U.S. export controls and require prior government approval.

In July 2009, the U.S. and India reached a milestone by agreeing on uniform language for End-Use Monitoring (EUM) arrangements that permits the United States Government to inspect on-site certain U.S. defense articles transferred to India, as required by U.S. law. The EUM expands the permissible range of defense-related trade with India, but it does not remove ITAR and EAR licensing requirements. Rather, prospective U.S. and Indian bidders and partners in defense trade need to be thinking about issues such as, what technologies will require licensing; what technologies are likely to receive licenses; what procedural safeguards are likely to be imposed on technology exports; and how should programs be structured to avoid export control problems.

Because compliance with U.S. export controls is critical to the process, early assessment of these issues is recommended, e.g., when companies identify prospective partners for bids. Certainly, U.S. companies cannot proceed without assurances that export control requirements will be met. Also, Indian companies need export counsel to help their U.S. partners deliver on their technology transfer proposals. These issues are complicated but can be managed.

Need for Advance Planning

The U.S. and India are natural allies because they are the oldest and largest democracies, respectively, and share a legal system based on common law. Now, the shared experiences of 9/11 and 26/11 underscore the great potential of the emerging U.S.-India strategic partnership. There are many issues to sort through as India embarks on high-stakes, big-ticket defense procurement, most importantly sensitive national security issues for both countries. By anticipating and addressing these issues in advance, however, private defense bidders can position themselves to participate in this important opportunity.

Mohit Saraf is a senior partner of Luthra & Luthra Law Offices and can be contacted at msaraf@luthra.com. Sanjay Mullick is a counsel in the International Trade practice of Pillsbury Winthrop Shaw Pittman LLP and can be contacted at sanjay.mullick@pillsburylaw.com.

 

 

by Mohit Saraf and Sanjay Mullick

The Paradox of Gender In the Human Rights Discourse

By Veena Poonacha

The language of human rights has the evocative power of initiating socio-political struggles and movements. Liberty and equality – the twin foundational principles of the discourse – have empowered people across geopolitical boundaries to overthrow tyrannical regimes and confront various forms of exploitations. This paper begins by acknowledging the power of human rights rhetoric to inspire the struggles for a more humane and just social order, but then pushes further by exploring some of the hidden tensions in the discourse, particularly when confronted with questions of gender rights.

These tensions within the discourse are not unique to gender rights, but also become apparent in articulations of other rights. They arise partly from the inevitable conflict of interests between various sets of rights and partly from the continued resistance to new ideas. For instance, the right to development demanded by developing countries may conflict with the land rights and entitlements of indigenous people. It may also conflict with environmental protections required for the survival of the planet. Contradictions also may be found in the theoretical underpinnings of the discourse when attempts are made to express, define, and extend the boundaries of these rights. The paradox of gender in the human rights discourse can be appreciated only within this broader understanding of contradictions in the discourse. Therefore, this gendered critique of “rights talk” is located within the broader critique of human rights that have grown out of the various struggles for a more inclusive framework of rights.

TENSIONS WITHIN THE
HUMAN RIGHTS DISCOURSE

The main criticism leveled on the human rights discourse refers to the fundamental question of who is the bearer of rights. Is it the individual, as articulated in the libertarian discourses of rights, or the community, as articulated in the communitarian notions of rights? The underlying concept of the individual in libertarian discourse is that the individual is an independent entity capable of and in a position to make rational choices. Such a conceptualization does not take into consideration the dynamic interrelationship between the individual and society. By defining the individual in opposition to society, it fails to acknowledge that individual choices are circumscribed by their lived experiences.

The discourse of rights also presupposes a non-existent equality of people’s conditions. It is difficult for those people on the fringes of society to realize their rights within a hierarchical social structure (based on class, race, and gender differences), a problem that is exacerbated by an elitist and conservative legal system. In the communitarian discourse, rights are defined by the notion of the community as a homogeneous unit. However, it fails to question the existing power inequalities in the community or even within a family. This power inequality within the community could mean that the rights of individuals are violated by the dominant group norms. Honor killings in India ordered by the caste/community elders against men and women who choose to marry against the dictates of family and community are indicative of this power inequality. The limitations of human rights discourse become apparent when examined through a gender lens.

Critical legal scholars also question the supposed neutrality of the law. They maintain that the law’s alleged neutral principles are driven by the exclusionary politics of the affluent and their attempts to maintain the status quo, creating tensions between the four main pillars of the rights discourse — namely liberty and freedom on one side and equality and justice on the other. For instance, the question of what sets the limits of individual freedom of speech and expression becomes important from the standpoint of protecting the rights of women and minorities. What if a person’s right to free speech and expression creates conditions that have a negative impact on another individual’s sense of self-worth? This obviously sets a limit to the freedom of speech held sacrosanct within the rights discourse. Civil libertarians believe that only acts, not beliefs or speech, should be punished and that penal sentences should not be increased because the person perpetrating the act was motivated by or held unpopular beliefs, including racist or sexist attitudes. The civil rights position maintains that the government can punish some criminal acts more severely than others, particularly if the motives are racist or sexist and therefore harmful to society.

WOMEN’S STRUGGLES FOR GENDER JUSTICE
A historical look at the struggles for women’s rights makes it apparent that the language of human rights as articulated in the age of enlightenment fueled women’s claims for civil and political liberties. Nineteenth century feminist discourse recognized the prevailing socio-political impediments to women’s rights. It did not, however, question either the class/race bias encoded in the libertarian discourse on rights, or the underlying assumption that rationality was a necessary pre-condition for any claim for rights. These omissions tended to perpetrate a certain exclusionary world-view on women’s rights. This is because it did not question the prevailing social order that made it possible for upper class women to gain freedom from household drudgery through the labor of working class women. It also did not criticize the prevailing libertarian view that rationality was the basis for assigning rights, but rather assumed that through access to education, women would be able to claim their right to equality.

In India, because the women’s empowerment movement was closely allied with the nationalist movement the parameters of the debate on women’s rights were different. Embedded in early-twentieth century Indian feminist articulations were ideas of nationalism and social transformation. Thus, influenced by the existing political philosophical discourses of nationalism and social justice, the first wave of the Indian women’s movement sought to include in the rights discourse not only formal political rights, but also ideas about socio-economic justice.

The feminist movement that developed in the 1960’s has pointed to the socio-political impediments to the realization of women’s rights. It has critiqued the overwhelming misogyny in society that denies a woman her basic right to survival — a point made amply evident from the declining sex ratio in India. It also points out that while formal equality is granted in the Constitution, attempts to realize gender rights inevitably meets with resistance. This resistance to women’s equality is evident from the long struggle to pass the Protection of Women from Domestic Violence Act (2005), as well as the 14-year long struggle to ensure one-third representation of women in the state legislatures and parliament. The struggle is not yet over. It continues to face male resistance to power sharing with women.

Contradicting these arguments on the gendering of rights, it is worth observing that the denial of rights is not necessarily gendered. Men, particularly from the marginalized sections of society, are also unable to access their rights. Therefore, any analysis of rights from a gender perspective could well detract attention from issues that affect the whole community. Undoubtedly, the non-realization of even basic rights to food, clothing, and shelter affect both men and women. But what cannot be overlooked is that as long as men and women play gender roles, the culturally constructed notions of entitlements that are embedded within them deny women even their claims to humanity. Consequently they are seen as carriers of lesser rights.

GENDERING OF “RIGHTS TALK”

There is today clearly documented evidence to substantiate the claim that women are discriminated against and denied their fundamental right to survival, access to resources, and reproductive control. In the final analysis, the process of gender socialization itself is a violation of basic human rights as it attempts to control women’s autonomy, thought, and action. When such a mind-set is enmeshed within other blatant forms of denials, the stage is set whereby the realization of women’s rights remains only a remote possibility. The prevailing ideology disparages the woman and defines her as the “other.” Such misogynist ideologies often justify gendered violence. The effects of such crime against women are two-fold: a) it enforces their subordination by creating a climate of fear making it difficult for women to pursue their right to education and better employment opportunities; and b) it justifies their subordination through the portrayal of their victim-hood. Crimes against women therefore cannot be considered isolated aberrations, but go directly to define power relations between men and women.

Feminist critics of the prevailing socio-political order also criticize the “rights talk” theories as prejudicial to women. Research has enabled them to identify the gender blindness within dominant theories and shift the focus of enquiry from the vantage point of men to women. As a result, the overarching generalizations that characterize dominant discourses have been abandoned in favour of emphasizing the experiential basis of knowledge. The process has had specific implications for the rights discourse. The discourse (which strictly speaking, straddles liberal political philosophy, ethics, and legal theories) is premised on the assumption of the objectivity of knowledge – the “knower” is seen as existing outside the “knowable.” Consequently, the rights discourse in its classical formulation did not necessarily take into account the socio-economic and political circumstances of people’s lives; rather, it assumes that individuals are able to actualize their rights through rational choice. Pointing to the constraints in women’s lives, feminist theories have challenged the claims of neutrality within the epistemology of rights.

IMPLICATIONS FOR GENDER RIGHTS

The ensuing debates have thrown up several corollary questions on the assumed neutrality of the law and its ability to deliver justice to those who do not have equal access to the legal system. It also asks if gender equity may be achieved only if social policies recognize the special circumstances of women’s lives and the ways in which the prevailing social order denies women their entitlements to education, economic independence, etc. Because, for instance, if a woman’s reproductive role as it is defined today is an obstacle to her right to work and economic participation, then is there not a need for special provisions in social policy to establish gender equity? By stressing the differences in the conditions of men and women, feminists have asked for special concessions so as to make equality a reality. However, claims for special protections or even affirmative action through reservations, etc., also have their own limitations as they can inadvertently force women into clearly demarcated areas defined as feminine without changing the gender ideology.

Feminists also critique the semantics of “rights talk” as grounded in the artificial dichotomy in the discourse between the public and the private spheres. Human rights discourse tends to focus on the relationship between the individual and the state in the public arena. Insofar as women’s lives remain circumscribed within the private area of family, the protection of their rights remains outside the purview of state protection. Violence within the home, for instance, gets ignored; attempts to intervene in cases of family violence is seen as an intrusion of the state apparatus in the private space of the home and a violation of individual rights (read “man’s rights”). Male resistance to any laws protecting women from domestic violence becomes apparent in the media representation of its misuse. The difficulty of realizing gender rights is apparent also in the current human rights discourses that focus on community rights. To be sure, women are rarely community leaders and their voices therefore remain unheard.

Additionally, there is a growing disillusionment on the capacity of the existing legal structure to promote gender justice. Insofar as the legal system operates on established precedents, it tends to uphold a conservative social order. The legal system is relatively powerless when compared to other ideological mechanisms in society to initiate social change.

Feminist articulations pointed to the politics of the human rights discourse and the ways in which the language of rights is used to justify control over women. The right to life, for example, is the most intrinsic to the entire discourse. A minimum definition of this right has, so far, been formulated within law as negative sanctions against murder and the unlawful deprivation of the life of the individual by the state. The attendant polemics generally have been concerned with the rationale for capital punishment as well as the right to life of the unborn. And yet, as feminists have argued, in a society that glorifies war and sees capital punishment as legitimate, the sanctity of life cannot be seen as an absolute value. In the absence of safe contraceptives and women’s control over their bodies, the denial of choices for women is merely an attempt to impinge on their reproductive rights. The parameters of the debate are different in India, as the discussion on abortion rights is also located within policies for population control. The dilemma of the feminist position on abortion rights is colored by the declining sex ratio as well as the absence of sexual/reproductive rights for women. Therefore, there is within the Indian women’s movement a call for the better implementation of the Pre-Natal Diagnostic Techniques (Regulation and Prevention of Misuse) Act of 2003, in ways that does not further victimize women. This demand, however, is not the final feminist position on the Act. Feminists struggling for disability rights question the implicit notion in the Act that the possibility of genetic defect is a justifiable ground for abortion.

CONCLUSION

This article has attempted to illustrate the difficulty of using the human rights discourse to realize gender equality. On one hand, feminist politics is caught in a struggle to protect rights which we take for granted; on the other hand, it is also used to extend the boundaries of such rights. This accounts for the rich diversity of feminist political responses. There can be no quick-fix solutions or a single response. Gender identities are intersected with other sets of class, race and religious identities. The question becomes who speaks for whom. How does one, for instance, view the struggle by Muslim women in France to be veiled in public? Is the purdha observed by Muslim women a symbol of their subordination, or an assertion of their cultural rights, in which case is the state justified is banning it? Similarly, how does one respond to cultural practices of female genital mutilation in certain parts of Africa through the human rights discourse? Should it be condoned as a cultural right of a community or should it be banned as a human rights violation? These questions do not lend themselves to easy answers.

Veena Poonacha is the Director of the Research Centre for Women’s Studies at Mumbai’s SNDT Women’s University. This article builds on her earlier article, On the Fringes of Human Rights Discourse: Violence Against Women in Intimate Relations, Family Violence in India (Swati Shirwadkar, editor, 2009). She may be contacted at veena_poonacha@yahoo.co.uk.

The State of Civil and Human Rights in India

The condition of civil and human rights in India depends on who you ask. Many non-government organizations (NGOs) I know will say that it is appalling; but the Government – particularly in many states of India – will say that it has never been better! The reality is somewhere in between. Violations of civil and human rights in a vast continent like India are legion, but the silver lining is that they are often exposed by a free press, and where possible, remedied by judicial activism.

The Chapter on fundamental rights (Part-III) of the Indian Constitution is directed to the States and their agencies. Courts may and do grant relief where the executive or legislative branches of government infringe on fundamental rights. But no provisions of the Constitution prohibit individual citizens from violating the civil and human rights of other citizens, nor do laws impose any penalty, nor provide a remedy, for violations by citizens of human rights of other citizens. As a result, a large number of people in India are deprived of a life of peace and justice. This was pointed out to me some years ago, when high-profile American judges visited India to participate in an Indo-US Legal Forum, a Supreme Court of India program. Justice Antonin Scalia, a man known not to mince words, said that the rights granted to U.S. citizens under the Civil Rights Act of 1964, enacted in response to the pressures of the civil rights movement, were not granted to Indians under India’s laws or Constitutional framework. He was right. We do have a Civil Rights Act, but that only prohibits the practice of “untouchability” in all its forms. The Constitution and the laws guarantee rights against the State and its agencies, but do not protect the rights of a group of citizens against another – a crying need in these fractious times.

The Inhuman Practice of “Untouchability” Continues

A few months ago, the Supreme Court of India sentenced five persons to life imprisonment for brutally killing seven Dalits, those belonging to the lowest caste in Hindu society, in Uttar Pradesh, India’s largest State. And this is what the Judges said:

Unfortunately the centuries old Indian caste system still takes its toll from time to time. This case unfolds the worst kind of atrocities committed by a so called upper caste (Kashtriyas or Thakurs) against the so called lower castes in a civilised country.

This “civilised country” has abolished “untouchability” and social backwardness in its Constitution. But alas, many of its inhabitants have not yet eliminated it from their hearts.

Restrictions Against Residing and Working Anywhere in the Nation?

While old forms of discrimination continue, new forms of discrimination – discrimination despite law – have surfaced. Articles 19(1)(d) and 19(1)(e) of the Indian Constitution confer on all citizens a fundamental right to move freely throughout the territory of India and also to settle in any part of India. Permanent restrictions on such freedom of movement are suspect. There are many Court decisions that establish this. But politics trumps law, even constitutional law, perhaps best exemplified by the growing phenomenon called “preference-for-sons-of-the-soil”: it seeks to reserve for locals jobs and places in educational institutions: “Maharashtra only for the Maharashtrians,” “Punjab only for the Punjabis,” is the clarion call. But, in this “land of a thousand mutinies,” as V.S. Naipaul has pertinently called it, we cannot truthfully say Bihar only for the Biharis, because what would Maharashtra and Punjab and the rest of the country do without the hardworking Biharis, who earn their living in states outside Bihar? This new ogre of discrimination that has raised its ugly head needs to be eradicated; it can only be done with astute political will, and by firmness of judicial diktat. Political parties who indulge in it must be disenfranchised by the Election Commission. But unfortunately popular Governments hate to lose votes thus perpetuating “preference-for-sons-of-the-soil” policies: this is one of the great dilemmas of modern Indian Democracy.

A change in attitudes will not occur through laws and edicts, but only by meaningful education, education that alters settled habits of the mind. We will have to go through many more difficulties before it dawns on the mass of the voting populace of India (about 700 million) that when we achieved independence we failed to attain standards of education that would enable WE THE PEOPLE of India to live up to the ideals of a truly free, and independent nation. The sons-of-the-soil agitation is not good for India. The strength of this great country lies in its vastness and in its being home to a pluralist society in which diverse and varied ethnic, social, and cultural interests co-exist, sometimes peaceably, sometimes not. Ending discrimination is very important for this country, but we cannot end discrimination without tolerance and a spirit of accommodation: qualities which are at present in short supply.

Growing Intolerance – A Violation of Personal Rights

Article 25 of our Constitution guarantees, subject to public order, morality and health, that all persons be equally entitled to freedom of conscience and the right to freely profess, practice and propagate their religion. But what use is this Article if it is not enforced or observed in its true spirit? I recall the case of a minuscule sect in this country, numbering only a few thousands, called Jehovah’s Witnesses. They live mostly in Kerala. They are Christians, although with a particular belief not shared by other Christians. Their belief revolves around three short passages in the Book of Exodus in the Bible, which they believe are the words of God. This is what an angry God says in the fiery Old Testament.

20:3 Thou shalt have no other gods before me.

20:4 Thou shalt not make unto thee any graven image, or any likeness of anything that is in heaven above, or that is in the earth beneath, or that is in the water under the earth.

20:5 Thou shalt not bow down thyself to them, nor serve them . . .

Jehovah’s Witnesses interpret these words literally and will not bow down to graven images, salute the national flag, or sing the national anthem. In Nazi Germany, they gladly went to the concentration camps for refusing to raise their hands in the Nazi salute because of these words of God found in the Old Testament.

Until 1985, children of this faith in Kerala regularly attended the public schools. In one such school, the Indian National Anthem – “Jana Gana Mana” was sung at the beginning of each day. Children belonging to the Jehovah’s Witnesses stood at attention but refused to sing, not because they were opposed to the words or thoughts expressed in the National Anthem, but because of the tenets of their religious faith. No one considered this disrespectful. Besides, there was no law compelling any one to sing, or to play, the National Anthem.

But in July, 1985, a member of the Legislative Assembly of Kerala on a visit to the school noticed that three children whose parents were Jehovah’s Witnesses did not sing the National Anthem at the morning assembly. He considered this unpatriotic and raised a question in the Kerala Legislative Assembly. The Assembly appointed a Commission of Inquiry, which reported that, although the children did not sing, they were law-abiding, and showed no disrespect to the national anthem, they stood in respectful silence when it was sung. On the instructions of the Inspector of Schools, the three children were expelled from the school.

A writ petition was filed in the High Court of Kerala seeking a writ of prohibition against the authorities preventing the children from attending the school. The High Court rejected the plea. I was consulted. We decided to file an appeal to the Supreme Court of India invoking Article 25 of the Constitution and we succeeded. The Supreme Court of India reversed the verdict of the High Court. The Supreme Court held that the children did not join the singing of the National Anthem in the morning assembly because of their conscientiously-held religious faith, which did not permit them to join in any rituals, except prayers to Jehovah.

The Court noted “Jehovah’s Witnesses wherever they are, do hold religious beliefs which may appear strange, even bizarre to us, but the sincerity of their beliefs is beyond question.” The Court held that the childrens’ expulsion from school violated the fundamental right of “freedom of conscience” guaranteed in Article 25(1) of the Constitution of India. At the end of their judgment, the Justices encapsulated the consistent attitude of the highest court in matters of genuine religious faith, in eloquent words that need to be remembered:

We only wish to add: (said the Judges) that our tradition teaches tolerance; our philosophy preaches tolerance; our Constitution practices tolerance; let us not dilute it.

The Justices directed the authorities to readmit the children to the school and to permit them to pursue their studies without insisting they sing the National Anthem in the morning assembly.   But they were not admitted – Tolerance in the face of unpatriotic behaviour? Never!

The Judge, who delivered the judgment of the Court was castigated by a high ranking leader of the then ruling Congress party as having forfeited his right to be called “either an Indian or a Judge”! When this party leader was hauled up before a Bench of three Judges for “scandalising the Court,” the Judges pusillanimously refused to issue even a notice of contempt on the Congress leader on the specious ground that the Attorney General had not given his consent to the initiation of contempt proceedings! In short, the judgment, though correct in law, and enforceable was simply unacceptable to a large majority of what was then characterised as “right thinking people.” Despite the verdict of the Highest Court in the land the children would not be admitted to any school in Kerala. They are still not admitted: they get their tuition only at home.

Jehovah’s Witnesses had won their constitutional case, but lost their constitutional right which the decision in the case had affirmed. Discrimination against this small miniscule sect of Christians continues — despite law.

Fali S. Nariman is a distinguished Indian constitutional jurist and senior advocate in the Supreme Court since 1971. He may be contacted at falinariman@yahoo.com.

 

 

 

by Fali S. Nariman

Case Notes – Spring 2010

By B.C. Thiruvengadam

Does an email exchange evidencing the parties’ agreement to arbitrate a dispute regarding a contract create a binding arbitration agreement?

Yes, according to the Supreme Court of India. In Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd., India, 2010 (1) SCALE 574, the petitioner, Trimex International, a Dubai-based company, placed an order for mineral ores from the respondent, Vedanta Aluminium. According to the petitioner, it made a commercial offer by email and, following an exchange of several more emails, the respondent accepted its offer via email. Based on this acceptance, the petitioner sent a formal contract containing a detailed arbitration clause to the respondent by email, which the respondent accepted and returned to the petitioner on the same day. A dispute arose with respect to the performance of the contract and the petitioner sought to invoke the arbitration clause. The respondent objected, arguing that there was no written contract containing an arbitration clause.

The Supreme Court examined each of the emails exchanged between the parties. Relying upon its earlier judgment in Great Offshore Ltd. v. Iranian Offshore Engg. and Construction Co., 2008 14 SCC 240, the Supreme Court stated: “Technicalities like stamps, seals and even signatures are red tape that have to be removed before the parties can get what they really want – an efficient, effective and potentially cheap resolution of their dispute.” The Supreme Court held that the parties entered into a binding contract, which included the arbitration clause, by the exchange of emails, even though no formal contract was signed by the parties.

May a complaint be lodged under the Protection of Women from Domestic Violence Act, 2005, against a person who does not reside in the complainant’s household?

In K. Narasimhan v. Smt. Rohini Devanathan, ILR 2010 Kar 669, the High Court of Karnataka has held that an action may not be brought under Section 12 of the Act if the accused does not reside in the same household as the complainant. The petitioner, K. Narasimhan, challenged a complaint filed against him under the Act by his brother’s wife. The petitioner contended that he was a resident of Canada who visited Chennai occasionally. The complainant was living with the petitioner’s brother in Bangalore. The relationship between petitioner’s brother and the complainant had strained and the complainant lodged a complaint against her husband as well as the petitioner alleging that, when she and her husband went to Chennai to meet the petitioner, she was subjected to emotional abuse.

The Court quashed the complaint against the petitioner because the petitioner did not reside in the same household as the complainant. In fact, the complainant went to Chennai to meet the petitioner who had traveled from Canada for a brief visit. According to the Court, the basic ingredient for a complaint under Section 12 of the Act is that the complainant and the accused live together and share a household by marriage or through a relationship in the nature of marriage. An allegation of abuse alone is not enough to bring a claim under the Act.

Is a preemption clause (right of first refusal) regarding shares held in a public limited company enforceable?

The Bombay High Court, in Western Maharashtra Development Corpn. Ltd. vs. Bajaj Auto Ltd., [2010] 154 Comp Cas 593 (Bom), has held that a preemption clause in an agreement between two groups of shareholders is contrary to Section 111A of the Companies Act, 1956, and, therefore, unenforceable. Western Maharashtra Development Corpn. Ltd., an undertaking of the Government of Maharashtra, entered into a protocol agreement with Bajaj Auto Ltd., leading to the creation of Maharashtra Scooters Ltd. (“MSL”). Western Maharashtra held 27% of the shares in MSL and Bajaj Auto, the respondent, held 24%. The agreement had a preemption clause requiring a party who is willing to sell its shares to give the first option to the other party. The agreement further provided that should a dispute arise in the price demanded or offered, the same should be resolved by arbitration.

Western Maharashtra offered to sell its shares to Bajaj Auto, but a dispute arose regarding the valuation and a joint reference was made to the arbitrator. Western Maharashtra, however, argued that the protocol agreement was null and void because it violates Section 111A of the Companies Act, 1956 and Section 9 of the Companies Act. The arbitrator ignored Western Maharashtra’s objection and determined the value of the shares.

Section 111A of the Companies Act, 1956, provides that the shares or debentures of a public limited company, and any interest therein, shall be freely transferable. Section 9 of the Companies Act, 1956, provides that the provisions of the Act shall have effect notwithstanding anything to the contrary contained in the company’s charter documents, such as its articles of association and memorandum of association. The Court held that the preemption rights, provided for in the company’s articles of association, may not override Section 111 A of the Companies Act, 1956.

May a conviction under Section 302 of the India Penal Code be set aside by the High Court if the lower court did not conduct the trial fairly?

In a landmark judgment, the Delhi High Court set aside a murder conviction in the Sessions Court where there “has not been a fair trial to the appellant and the blame has to be principally on the shoulders of his counsel, with the learned Trial Judge partly sharing the blame for the reason he did not just bother to ensure that the defence raises the standard to meet the requirements of a fair adversarial trial.”

In Salamat Ali v. State of Delhi, Criminal Appeal No.242/2010 (unreported), the Delhi High Court relied on the decisions of the United States Supreme Court in Strickland vs. Washington, 466 U.S. 668 (1984), and the Ninth Circuit Court of Appeals in Turner v. Duncan, 158 F.3d 449 (9th Cir. 1998). The High Court criticized the conduct of the defence counsel in the trial proceedings. Quoting the U.S Supreme Court in Strickland v. Washington, the Court stated:

No doubt, counsel’s assistance and performance at a trial has to be highly deferential but as observed by the US Supreme Court in the decision reported as Strickland vs. Washington 466 US 668 (1984), with regard to the required showing of prejudice, the proper standard requires the defendant to show that there is a reasonable probability that, but for counsel’s unprofessional efforts, the result of the proceeding would have been different. A reasonable probability is a probability sufficient to undermine confidence in the outcome. A Court hearing an ineffectiveness claim must consider the totality of the evidence before the Jury or the Judge.
The Delhi High Court set aside the judgment of conviction of the lower court and remanded the case for a new trial, with directions to the trial judge to ensure that effective counsel is made available to the appellant and that another opportunity be given to him to produce defence witnesses.

Compiled by B.C. Thiruvengadam, of Thiru and Thiru, Bangalore, with input from Mr. Ajay Verma, Advocate, New Delhi.

Historic First Delegation From India Opens New Doors

By Jaipat S. Jain

April 11 is the last day of the annual, two-week, Cherry Blossom Festival in Washington, D.C. The festival, held amidst blossoming cherry trees that line some of the beautiful, sun-drenched, boulevards of the capital, celebrates the gift by Japan to the United States of the cherry tree in 1912. April 11th this year was also a day to celebrate for lawyers from India and the United States for a different reason: the visit to Washington, D.C. of a delegation of lawyers from India at the invitation of the International Law Section of the American Bar Association (ABA).

The International Law Section of the ABA invited the Society of Indian Law Firms (SILF) to join its annual Spring Meeting. The Indian delegation, led by SILF president Lalit Bhasin, and accompanied by 21 lawyers, was the first such delegation from India to an ABA meeting. Excellent weather, combined with an abundance of warmth and hospitality from the host India Committee Steering Group led by Erik Wulff (DLA Piper; co-chair), Aaron Schildhaus (Law Offices of Aaron Schildhaus; immediate past chair, ABA International Law Section), Gene Theroux (Baker & McKenzie), Doug Adler (Vedder Price) and Shikhil Suri (Crowell & Moring), made April 11th a perfect day for the SILF delegation to arrive in Washington, D.C.

Lawyers have to be lawyers. No sooner had they arrived, they got together to discuss and analyze their busy schedule for the next two days in Washington, D.C. and the balance of the week in New York City. The highlight of the day was an evening reception hosted Crowell & Moring led by Shikhil Suri and Morris DeFeo. In his address, Lalit Bhasin (co-chair, ABA International, India Committee) expressed his appreciation to the Steering Group for making it possible for lawyers from India and the United States (and beyond) to forge a relationship based on common values and a shared desire to bring the fruits of economic progress to their respective peoples. He introduced the delegation, observing that the lawyers represented the best firms from India.

The next day started early at the George Washington University School of Law, where Dean Greg Maggs kicked off an informative lecture and Q & A session by Lyle Denniston, veteran journalist and historian of the Court. The lecture was followed by a lively and informative panel discussion on the U.S. Supreme Court moderated by Hon. Sanjay Tailor, Associate Judge, Circuit Court of Cook County, Illinois. Panelists Linda Dreeben, Deputy General Counsel, National Labor Relations Board, Philippa Scarlett, Partner, Kirkland & Ellis and former Law Clerk to Justice Stephen Breyer, and Robert Brauneis, Associate Professor, George Washington University and former Law Clerk to Justice David Souter, each shared their experiences and knowledge of the inside workings of the Court. Of course, with Justice John Paul Steven’s retirement announcement just days earlier, the subject of Supreme Court appointments drew much discussion.

Next, a panel discussion followed on U.S.-India commercial relations, led by Douglas Adler. Doug has had a long-standing relationship with India, both in private practice and as part of the Federal government. He was joined by Jeffrey Shane (Partner, Hogan & Hartson), a former Undersecretary, U.S. Department of Transportation, who was closely involved with the negotiations of the U.S.-India Open Skies Aviation Agreement, and Jessica Farmer, Senior Loan Officer, U.S. Exim Bank. The panelists shared their first-hand experiences of doing negotiations with Indian agencies, peppered with interesting anecdotes and insights.

The discussion was followed by a luncheon at the Metropolitan Club hosted by Arnall Golden & Gregory, Hogan & Hartson, and Vedder Price, and chaired by Doug Adler. The Honorable William S. Cohen, former United States Senator from Maine and Secretary of Defense, and current Director of the U.S India Business Council, delivered the keynote address. Secretary Cohen shared his personal experiences as a lawyer, legislator and member of the executive branch of the government, as well as his enthusiasm for the U.S. – Indo relationship. In their remarks, each of Doug Adler, Erik Wulff and Lalit Bhasin recognized that the visit by lawyers from India to the ABA meeting was a historic first step in further deepening the economic and other ties that bind the United States and India.

The lunch meeting was followed by a panel discussion and Q & A on U.S.-India commercial relations. Speakers and commentators included David Fagan (Covington & Burling), Mark Riedy (Mintz Levin), Robert Shanks (Raytheon International), Gene Theroux (Baker & McKenzie), Ajay Verma (Ajay Verma & Associates), Aseem Chawla (Amarchand & Managaldas & Suresh A. Shroff & Co.), H. Jayesh (Juris Corp), and Marcia Wiss (Hogan & Hartson).

An evening reception was held at the offices of Baker & McKenzie. A highlight of the reception was the unobstructed and spectacular view of the White House from the terraces of Baker & McKenzie, giving the delegation members and their host memorable photo opportunities. Gene Theroux and Elizabeth Stern welcomed the delegation on behalf of Baker & McKenzie and spoke of the possibilities of greater U.S.-India relations in the area of practice of law. Lalit Bhasin, speaking on behalf of the delegation, thanked the host and said that the delegation came here to learn and build bridges between the lawyers of the two countries.

The delegation arrived in New York City on April 13th, and began the day with a luncheon meeting at the offices of DLA Piper. Erik Wulff and Lalit Bhasin chaired the meeting. Each member of the delegation addressed the audience on the area of law that was the focus of his or her practice and fielded questions in those areas. The Spring Meeting of ABA International in New York City was formally opened later that evening with a reception at the Grand Hyatt, where ABA President-elect Stephen Zack set the tone for the next four days of meetings, continuing legal education programs, international practice boot camp, discussions on emerging trends in the practice of law, networking and social events. The meeting included seventy programs and was attended by over 1,500 lawyers from nearly 50 countries.

The next day, the first major session of direct interest to the India delegation was on Legal Process Outsourcing. Chaired by Mohammad Syed (King & Ballow), speakers and commentator included Anil Chaddha (GE Transportation), Jonathan Goldstein (Pangea3), Mark Heaphy (Wiggins and Dana), Madhu Khatri (Wipro), Lalit Bhasin, and James Duffy (New York State Bar Association). Later that day, the Honorable Hardeep Puri, India’s Permanent Representative to the United Nations, hosted a luncheon in honor of the Indian delegation at his residence. Mr. Puri expressed hope that lawyers would increasingly play a more active role in the negotiation of bilateral and multilateral governmental agreements on a pro bono basis.

The India Committee formally met the next morning for breakfast to discuss committee business. The gathering was addressed by Glenn Hendrix, chair of the International Section, among others. The India Committee was addressed by Erik Wulff, Lalit Bhasin, and Aaron Schildhaus, among others. The Committee discussed publishing books or pamphlets on matters of interest to the membership through the ABA, as well as topics for future Web-based seminars. Mr. Bhasin presented souvenirs to Sanjay Tailor, Rita Roy, Aaron Schildhaus, Erik Wulff and Gene Theroux, among others, for their contribution to the Committee.

Later that day, ABA President Carolyn Lamm, addressing a luncheon of the International Law Section, welcomed the India delegation. Lalit Bhasin addressed the attendees on behalf of the delegation and expressed his hope that this first visit by a delegation from India at the invitation of the ABA will pave the way for annual exchanges between the two countries. His sentiments were warmly reciprocated. The India delegation then presented souvenirs to Carolyn Lamm and Glen Hendrix.

A highlight of the day was an hour-and-a-half-long meeting of the members of the SILF delegation, led by Lalit Bhasin, and the ABA, led by Carolyn Lamm, on the issue of foreign lawyers doing work in India. The meeting involved an exchange of information and views. Lalit Bhasin advocated strengthening of existing relationships between the two professions and seeking avenues of permissible cooperation between Indian and the U.S. law firms, such as participating in international arbitration proceedings in India or visits to India on specific client transactions or assignments, and vice versa for Indian lawyers in the U.S. Others advocated that the Indian legal markets should be opened up to foreign law firms.

The meeting was followed by a separate, continuing legal education program entitled “Hot Transborder Law Practice and Legal Ethics Issues: India-U.S.” It was chaired by Robert Lutz, II (past chair, ABA International, and professor, Southwestern University School of Law) and Erik Wulff. The panelists were Lalit Bhasin (SILF), Priti Suri (PSA Legal Consultants), Eugene Theroux (Baker & McKenzie) and Daniel Watson (Office of U.S. Trade Representative). The well-attended, lively program presented divergent views on the current state of openness of India’s legal services sector.

Over four days, members of the delegation attended and participated in various on-going continuing legal education programs and discussions and networking receptions, including a special hearing of the ABA International Section’s Outsourcing Task Force. On April 17th, the Indo-American Lawyers’ Association of New York hosted a farewell dinner reception, marked with warmth and bonhomie, in honor of the Indian delegation. It was addressed by, among others, its President, Sanjay Chaubey, President of the New York State Bar Association, Stephen Younger, and Lalit Bhasin.

The delegation consisted of the following persons: Jatin Aneja, Partner, Amarchand & Mangaldas & Suresh A. Shroff & Co.; Kewal Bajaj, Esquire; Rajesh Bhardwaj, International Investment Law Consultants; Maj. Guneet Chaudhary, Advocate, Supreme Court of India; Aseem Chawla, Partner, Amarchand & Mangaldas & Suresh Shroff & Co.; Manjula Chawla, Partner, Phoenix Legal; Manoj K. Chhabra, Partner, Astra Law Offices; Vishal Gandhi, Gandhi & Associates, Solicitor and Advocates; Dinkar Goswami, Goswami Associates; Nusrat Hassan, D.H. Law Associates, Advocates and Solicitors; Jaipat S. Jain, Partner, Lazare Potter & Giacovas LLP; H. Jayesh, Juris Corp, Advocates and Solicitors; Rajiv Luthra, Luthra & Luthra Law Offices; Suhail Nathani, Economic Laws Practice; Badri Nath, International Investment Law Consultants; Balraj Palli, Esquire; Ashok Sancheti, IC Sancheti & Co.; Ajesh Kumar Shankar, Chief, AKS Law Associates; Cyril and Vandana Shroff, Managing Partners, Amarchand & Mangaldas & Suresh Shroff & Co.; Priti Suri, Priti Suri and Associates/PSA Legal Counsellors; Dorothy Thomas, Partner, Kochhar & Co. LLC; and Ajay Verma, Founding Partner, Ajay Verma & Associates.

Jaipat Jain is a partner at Lazare Potter & Giacovas LLP in New York and is engaged in the practice of corporate and securities law. He may be contacted at jjain@lpgllp.com.

Domestic Violence Act, 2005 – An Aid to Battered Women

By Prachi Chindarkar

The Protection of Women from Domestic Violence Act, 2005 (the DV Act), was enacted to address abuse suffered by women and children below the age of eighteen years. The DV Act provides welcome relief to victims of domestic violence. In addition to addressing forms of domestic violence common to all cultures, the DV Act includes provisions addressing the unique socio-cultural elements of abuse and violence in marital and household relationships in India, making it a particularly powerful aid to battered women and children. This article reviews the salient aspects of the DV Act.

The DV Act protects women and children who fall prey to violence of any manner either within the family or in a shared household (i.e. in a domestic relationship). “Domestic violence” under the DV Act includes actual, or threat of, abuse, including physical, sexual, verbal, emotional, and economic abuse. It also includes harassment, such as unlawful dowry demands from a woman or her relatives. A domestic relationship under the DV Act includes the relationship between any woman who lives or has lived together in a shared household by virtue of kinship, marriage, a relationship in the nature of marriage, by adoption, or a joint family. Even women who are sisters, widows, mothers or single women living with the perpetrator of the violence are entitled to protection under the DV Act. All children, including adopted, step, and foster children below the age of eighteen years, are protected under the DV Act.

Enforcement of the DV Act is entrusted to state governments and each state is required to appoint one or more protection officer(s) in each district with clearly notified jurisdictional rights within which the protection officer(s) shall exercise their powers and perform the duties conferred on them under the DV Act. The protection officer(s) shall as far as possible be women with specified qualifications and experience. Any person who has reason to believe that an act of domestic violence is being, has been, or is likely to be committed can inform the local protection officer. To encourage people to come forward and report domestic violence, the statute provides that the informer will not be subject to any civil or criminal liability. An aggrieved person, any person on behalf of an aggrieved person, or a protection officer may present an application directly to the local magistrate seeking relief under the DV Act.

Judicial relief under the DV Act is available in many forms. The court may enjoin the abuser from committing any further act of abuse, communicating with the victim, and entering the victim’s place of employment or school. The court may award compensation or damages for losses suffered by the victim of abuse. The magistrate may, at any stage of the proceedings, direct the respondent or the aggrieved person, either singly or jointly, to undergo counseling. The magistrate may conduct the proceedings in camera, if the circumstances of the case warrant. Every woman in a domestic relationship shall have the right to reside in the shared household, whether or not she has any right, title, or beneficial interest in the same. The courts are authorized to pass restraining orders so that the abused woman may continue to reside in the same house. The DV Act also provides that the aggrieved person shall not be evicted or excluded from the shared household or any part of it. Before the DV Act was passed, a complainant faced the risk of eviction by the abuser.

The magistrate may grant temporary custody of any child or children to the aggrieved person or the person making an application on her behalf. The magistrate also may provide for visitation between the child and respondent, unless he is of the opinion that visitation by the respondent may be harmful to the interests of the child, in which case visitation shall not be permitted.

Before the DV Act was passed, domestic violence victims sought relief from the courts under the Indian Penal Code (IPC). The DV Act is more expansive than the IPC because the DV Act broadly defines (a) abuse subject to judicial sanction and, (b) the range of victims subject to protection. The IPC does not use the term domestic violence; instead, it addresses offences similar in nature to the offences described in the DV Act, but restricted to cruelty to married women. All other cases of household domestic violence had to be addressed under the offences of that respective act of violence under the IPC.

Before the DV Act was passed, those abusing women and children could only be prosecuted under the IPC. Victims who were dependent on their abusers often faced legal hurdles because the IPC is not gender specific. For example, section 498A of the IPC provides that a husband (or a relative of the husband) who subjects his wife to cruelty shall be punished by imprisonment for a term which may extend to three years and subject to fine. For the purpose of this section, “cruelty” means (a) any willful conduct which is of such a nature as is likely to drive the woman to commit suicide or to cause grave injury or danger to life, limb or health whether mental or physical of the woman; or (b) harassment of the woman where such harassment is with a view to coercing her or any person related to her to meet any unlawful demand for any property or valuable security or is on account of failure by her or any person related to her to meet such demand. This provision did not adequately safeguard domestic violence victims. The victim would most likely have to move out of her marital home to ensure her safety or face further violence in retaliation. There was no provision that would permit her to continue living in her marital home and raise her voice against the violence committed against her. The DV Act also deals with different types of abuses that were not addressed earlier. For instance, it provides relief against sexual abuse, including marital rape which is excluded under the IPC. Thus, the DV Act remedied many deficiencies in the law.

An offence under the DV Act is cognizable, that is, the police may arrest the suspected abuser without a warrant or investigation. The DV Act makes the offense non-bailable and provides for imprisonment for a term that may extend to one year or a fine up to twenty thousand rupees, or both. These provisions help bring the perpetrator to justice in a speedy manner. Importantly, on March 23, 2010, in an, as yet, unreported ruling, the Delhi High Court gave retroactive effect to the DV Act so that women who were subjected to domestic violence before the DV Act was passed in October 2006 may seek judicial relief.

The DV Act was crafted to directly and forcefully address family and household violence, taking into account the unique socio-cultural aspects that surround it in India. Together with the court’s decision to give the DV Act retroactive effect, battered women and children now have significant legal protections to combat abusive treatment.

Prachi Chindarkar is an associate with LawQuest and is admitted to the Bar Council of Maharashtra and Goa. She can be reached at prachi@lawquestinternational.com.

Sexual Harassment in the Work Place

by Madhooja Mulay

As more women join the Indian workforce the judiciary has recognized the need to address sexual harassment in the work place. Although India does not have a specific law to protect individuals from sexual harassment in the work place, individuals enjoy certain fundamental rights under the Indian Constitution, such as the right to equality before law (Article 14), freedom of speech (Article 19), and protection of life and personal liberty (Article 21). Over ten years ago, in Vishakha v. State of Rajasthan, AIR 1997 SC 3011, the Supreme Court of India, in a welcome form of judicial activism, applied the provisions of the Constitution to establish a set of guidelines with regard to sexual harassment at the work place. This case involved the brutal gang rape at the work place of a social worker, who tried to prevent a child marriage as part of her duties with the Women Development Programme. The feudal patriarchs became enraged, decided to teach the social worker a lesson, and raped her repeatedly. The social worker did not receive justice before the Rajasthan High Court and the rapists, “educated and upper caste affluent men,” were freed. Vishakha, a women’s rights organization, filed a public interest litigation in the Supreme Court of India. The Court found that the social worker was raped while she was working in her role as a social worker and thus had been raped at the work place. Based on this finding the Court established guidelines regarding sexual harassment, to be followed at all work places. The guidelines were formed on the basis of gender equality and the fundamental rights guaranteed by the Constitution, as well as international conventions and norms.

All employers are required to adhere to the guidelines announced in Vishakha. However, in the absence of a regulatory body or enforcement mechanism it is difficult to monitor compliance. The guidelines require employers to form a complaints committee to address sexual harassment of female employees. Additionally, the guidelines state that if an act of sexual harassment also amounts to a specific offence under the Indian Penal Code (IPC) or any other law, the employer is obligated to initiate an appropriate action in accordance with the law, primarily by filing a complaint with the appropriate authority. In addition to protection under the guidelines, victims of sexual harassment may initiate criminal proceedings against the offender under the IPC.

Important Features of the Guidelines

 Employers are required to establish a complaints committee chaired by a woman with at least 50% of committee members being women.

  • As soon as there is an incident of sexual harassment the victim should file a complaint with the complaints committee supported by a written report of the incident. The victim should ask for a receipt or a copy of the report.
  • Employers must ensure confidentiality of the complaint and vigilantly monitor victimization of or discrimination against the complainant.
  • The complaints committee is required to initiate an inquiry and, when it is established that the perpetrator was guilty of sexual harassment, impose immediate and appropriate disciplinary action.
  • The complaints committee is required to prepare and submit to the government an annual report regarding its functions and a list of complaints filed with it along with a description of steps taken by the Committee to address the complaints.
  • Employees must raise sexual harassment issues at employee meetings, employer-employee meetings, and other appropriate forums, and, if necessary, lobby to establish a complaints committee if the employer has failed to do so.

Vishakha was re-affirmed recently in D.S Grewal v. Vimmi Joshi and Ors, (2009) 2 SCC 210, where the Supreme Court ordered the employer to follow the guidelines and, in an unprecedented move, awarded costs of litigation to the victim of harassment. There is a bill pending before Parliament, the Protection of Women Against Sexual Harassment at Workplace Bill, 2007. However, until the bill becomes law, the guidelines continue to be treated as the law, even though they are not enforceable in the same manner as a statute.

Madhooja Mulay is an associate with  LawQuest and is admitted to the Bar Council of Maharashtra and Goa. She can be reached at madhooja@lawquestinternational.com.