Whether Admiralty Act Prevails over IBC or Vice Versa

(By V.B.Hari Narayan, Advocate, High Court of Kerala and Parvathy Suresh,3rd Year BBA; LL.B, Symbiosis Law School, Pune)

The recent decision of the Bombay High Court in Raj Shipping Agencies v. Barge Madhwa(Admiralty Suit No:6/15 and connected cases decided on 19.5.2020) is a first of its nature judgment answering the question regarding the interplay between Admiralty Act and IBC/Companies Act. The facts of the matter are fairly straightforward.

Several Admiralty suits were filed and Orders of arrest obtained in respect of the Defendant Vessel. During the pendency of the suit, the Company Court admitted Company Petitions against the owner of the Defendant Vessel and ordered it to be wound up. When the Admiralty suits were taken up for orders, the Official Liquidator objected to the suit proceeding further without obtaining leave under Section 446 of the Companies Act. Meanwhile, the National Company Law Tribunal, New Delhi,admitted a Petition under
S.7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC) against owner of the Defendant Vessel and the Moratorium period under Section 14 was declared.

The common question posed in all these cases was regarding the overlapping
effect of the Companies Act/IBC provisions over the Admiralty Act, particularly the impact on the rights available to a claimant under a maritime lien over the res. To put rest to the debate, the Court has comprehensively looked into the matter and decided upon the applicability, effect and consequences of the proceedings under IBC and Companies Act on the Admiralty Act and vice versa.

Issues raised

1.  Whether there is a conflict between actions in rem filed under the Admiralty
(Jurisdiction and Settlement of Maritime Claims) Act, 2017 and the provisions of IBC and if so, how is the conflict to be resolved?

2.  Whether leave under Section 446(1) of the Companies Act, 1956 is required for the commencement or continuation of an admiralty action in rem where a
winding up order has been made or the Official Liquidator has been appointed as Provisional Liquidator of the company that owned the ship?

Issue I

The submission of the parties from both the spectrums focused mainly on the following points:

1.The moratorium period under IBC will not apply to admiralty suits.

  Admiralty Act is a special Act while IBC is general Act which deals with corporate insolvency.The general principle of interpretation is that special Act override the general Act.

  Even if both are deemed to be special Acts, Admiralty Act will prevail over IBC
being the later one.

  A proceeding in rem is not a proceeding against a corporate debtor within the meaning of Section 3(8), and therefore Section 14(1)(a) to 14(1)(d) does not apply to Admiralty suits.

  The non-obstante clause under Section 238 giving an overriding effect to the
provisions of IBC will not be a ground to hold that IBC will prevail over the Admiralty Act as there is an implied non-obstanteprovision in view of the bar of
jurisdiction of all other civil courts.A later Act which impliedly excludes the jurisdiction of Civil Courts would prevail over an earlier special Act which also contains a
non-obstanteclause (Damji Valji Shah v. Life Insurance Corporation of India¹, Ashoka Marketing Ltd. v. Punjab National Bank², ICICI Ltd. v. MFV Shilpa³)

  Even on the declaration of the moratorium period, Section 52 of the IBC would
allow the Plaintiff/Claimant to realise his security on the event of liquidation.

2. The provisions of the Admiralty Act will be subject to the IBC.

  There exists a need for purposive interpretation of the words “corporate debtor”
as defined in Section 3(8) to include not only the proceedings against the
corporate debtor but also against the assets of corporate debtor.

  Since both the Acts are special Acts, the questions as to which prevails must be considered with respect to the purpose of the enactment to protect the rights of admiralty claimants which have to be found within the umbrella of the IBC and not de-hors the IBC. If an admiralty action against a vessel in rem is allowed, the object of the moratorium period under Section 14 would stand defeated and the provision of IBC would come to a naught.

1. There is a need for harmonious construction between IBC and Admiralty
Act so as to ensure that provisions of both the legislations are upheld and not defeated. A balance has to be stricken in accordance with the provisions to protect the right in rem available to the maritime claimants under the Admiralty Act as well as not to bypass or jeopardize the resolution process under the IBC.

Findings of the Court

1. The Court undertook to analyse the objective of the two statutes and the
purpose for which it has been enacted. The IBC, is a special statute devoted to the resolution of insolvency, liquidation and bankruptcy of corporate persons, firms and individuals⁴.The primary purpose of the legislation is to ensure revival and continuation of the corporate debtor by protecting him from his own management and from a corporate death by liquidation⁵. The Admiralty Act is a special Act vesting admiralty jurisdiction in certain High Courts. The purpose of it is to vest certain very valuable rights in respect of identified maritime claims.

2. The question regarding the non-obstanteclause needed an elementary recourse. Section 238 of the IBC is a non-obstanteclause giving the Code an overriding effect over any other law. In the same lines, Section 231 of the IBC also bars the jurisdiction of Civil Courts in respect of any matter in which the Adjudicating Authority is empowered under the Code to pass an order and, no injunction shall be granted by any Court in respect of any action taken or to be taken in pursuance of any order passed by the Adjudicating Authority under the Code. At the same time, there is no expressnon-obstanteclause provided under the Admiralty Act. The Act provides admiralty jurisdiction to certain High Courts, thus establishing an implied bar on civil Courts from having the jurisdiction to entertain an action in rem.The general principle of interpretation that the later enactment will prevail is not applicable in this conflict, as it only applies when they are both special Acts containing non-obstanteprovisions. After taking into account various judicial pronouncements, the court highlighted the need to resolve the inconsistency and conflict by referring to the purpose and policy underlying the two enactments and the clear intendment conveyed by the language of the provisions. (Solidaire India Ltd. v. Fairgrowth Financial Services Ltd.⁶, Ram Narain v. Simla Banking and Industrial Company Ltd.⁷, Ashoka Marketing Ltd. v. Punjab National Bank⁸, Employees Provident Fund Commissioner v. Official Liquidator of Esskay Pharmaceuticals Ltd.⁹)

3. The distinction between an action in remunder the Admiralty Act and an action in personamis of vital importance when considering the provisions of the IBC in order to resolve the conflict through harmonious construction. An action in remis only against the ship which is considered as having a legal personality independent of that of the corporate owners. This remains as an actionin rem regardless of whether the owner has appeared. Thus, this action in remis neither an action against the owner for the ship who may be the corporate debtor as defined under IBC, nor proceeding against the asset of the corporate debtor. The action will continue in rem against the ship which will be sold and the sale proceeds paid out to the successful claimants after determination of priorities amongst the various maritime claimants.

4. The Court observed that since an action in rem is against the vessel which is a separate and distinct legal entity de hors the owner, an action against the ship cannot be considered to be an action against the owner and hence the differences between both the Acts can be reconciled. The Court emphasized on the fact that an action in rem continues to be an action in rem even in a situation where its Owner enters appearance but fails to furnish security/bail for release of the vessel. A judicial sale by an Admiralty Court of a vessel free of all encumbrances does not prejudice the rights of any of the parties as they move against the sale proceeds.

5. Several authorities have held that once a ship is arrested in respect of a maritime lien or claim, the Claimant becomes a secured creditor qua that arrested vessel to the extent of  value of the vessel and not against the owner or his assets^10.“A claimant having only a statutory right of action in rem becomes a secured creditor at the latest when he causes the ship to be arrested ¹¹.”Furthermore, an arrest cannot be equated to an order of attachment in so far as the only requirement is to identify the ship and establish a maritime claim.

6. After analysing the salient features of both the legislations, the Court sought to harmoniously read and construe the conflicting provisions in the Acts.

7. Section 3(8) of the IBC defines a corporate debtor as,‘corporate person who owes a debt to any person’ and Section 3(7) corporate person as, ‘a company …. a limited liability partnership …. or any other person incorporated with limited liability under any law for the time being in force’.Since it has been established that a ship is a juristic person independent of its owner, an action in remfiled under the Admiralty Act for the arrest of ship would not fall under the ambit of corporate debtor under IBC. Thereafter, this proceeding would neither amount to an institution of a suit nor a continuation of a suit against the Corporate and thus will not be barred by the declaration of moratorium under Section 14
of the IBC. Yet, the Court clarified that an action in rem, if instituted prior or after the declaration of moratorium, may proceed but the suit thereafter, will not be continued after such an arrest as this would hinder the object of Corporate Insolvency Resolution Process (CIRP) under IBC.

8. If the resolution process fails, and a liquidation order is passed against the corporate debtor under Section 33, this per sewould not bar institution of an action in rem against the ship. The Liquidator appointed may defend the proceeding under Section 35(1)(k). Further, the proceeds from the sale would be utilised for the maritime claim/lien holders and priorities would be as per the provisions of the Admiralty Act as supported by Section 52(4) of the IBC which permits a secured creditor to realise the secured assets in accordance with the applicable law.

9. Hence, the Court concluded that the provisions of the Admiralty Act and the IBC should be read harmoniously, and laid out various scenarios wherein there would be an interplay of both the legislations.

I. If a Plaintiff has commenced Admiralty proceedings in rem and obtained an order of arrest of a ship from an Admiralty Court, subsequent to which insolvency proceedings are filed against the owner of the vessel and the adjudicating authority declares a moratorium under Section 14 of the IBC.

• The Court observed that in such a situation if the security has been provided to the Admiralty Court for release of the vessel prior to the declaration of moratoriumthen the Suit is no longer an action in rembut would be considered to be an action in personamagainst the owner who had furnished security and would not be continued up on the declaration of moratorium in the light of Section 14(1)(a) of the IBC.

• The Plaintiff would be considered as a secured creditor having obtained security exclusively in respect of his claim.

• If the insolvency resolution process (CIRP) is successful and a Resolution Plan (RP) for the owner/corporate debtor has been approved, then the Plaintiffs claim, for which he has obtained security, would be determined by the Committee of Creditors and the Adjudicating Authority determining the amount of the Plaintiffs claim. The Plaintiff would ordinarily be entitled to the full extent of amount claimed. Contrariwise, if the insolvency resolution process was not successful and the company is ordered to be liquidated, the Plaintiff would have the sole benefit of the security provided. In such a case Plaintiff will be a secured creditor in liquidation and will be entitled to realise its security interest as provided in Section 52(4) of the IBC which provides “A secured creditor may enforce, realise, settle, compromise or deal with the secured assets in accordance with such law as applicable to the security interest being realised and to the secured creditor and apply the proceeds to recover the debts due to it.”The law as applicable would be the Admiralty Act. The Liquidator has the option to defend the suit as provided under Section35(1)(k) of IBC.

• On the other hand, if the security has not been furnished at the time when the moratorium is declared,then the Admiralty Court will not proceed further. The RP appointed may enter appearance and tender security. If no security is furnished, the vessel will remain under arrest until the end of the CIRP period, i.e., a period of 330 days. The Plaintiff will be treated as a secured creditor and the maritime claim/lien over the vessel will operate as a charge on the vessel. Thereafter, if the company is liquidated, vessel will be sold in accordance with the provisions of the Admiralty Act to maximize its realisation value.Following, Admiralty Court may invite claims against the sale proceeds and parties may file their actions against the sale proceeds. The determination of priorities will also be done in accordance with Section 9 and Section 10 of the Admiralty Act and not in accordance with Section 53 of the IBC. If they are unable to recover the claim as such, they would have to proceed against the owner’s assets. Conversely, if the resolution plan is approved, as secured creditors qua the ship, the claims of all the Claimants who have obtained an order of arrest would be determined in accordance with the approved plan. The claims in respect of the vessel under arrest would be considered by the COC/Adjudicating Authority while approving the resolution plan accorded priority quathe vessel and the inter sepriority among the parties would be as per the provisions of the Admiralty Act. The ship value would be the liquidation value assigned to the particular vessel. In case the claimants are unable to recover their claim, they will be considered as operational creditors and may recover depending on the payment that is offered to the operational creditors in the plan.

• Similarly, if the security has not been furnished and the vessel remains under arrest,
the Admiralty Court will not order the sale of the vessel during the moratorium period unless an application for sale is made by the RP or if the vessel is not being manned, equipped and maintained by the RP during the moratorium. In such a situation, the Admiralty Court may sell the vessel at the consideration of claimant who has obtained an order of arrest. It is required that a notice is given to the owner before the sale is carried out by the Admiralty Court. In all such cases, the proceeds from the sale will not be distributed and be retained by the Admiralty Court till the outcome of the CIRP or liquidation.

II. If a moratorium has been declared under Section 14 of the IBC before any Admiralty Suit in rem is filed for enforcement of a maritime lien or maritime claim.

The Court has held that, since an action in rem for arrest of a vessel is not against the corporate debtor, there is no bar to filing such an action and effecting of a warrant of arrest on the vessel and it is not hit by the moratorium provisions of Section 14(1)(a) of the IBC. But, once the RP enters appearance on behalf of the owner/corporate debtor, the suit would be stayed and not proceed further till the insolvency resolution procedure is completed or the Liquidator is appointed. The vessel may continue to trade upon an undertaking by the RP. The Plaintiff, would be considered as a secured creditor and the procedure and principles set out in Scenario I would apply, whether insolvency resolution process is successful and a resolution plan is approved or if the resolution process fails and the liquidator is appointed as the case may be.

All expenses incurred with the permission of the Court for preservation and mantenance of the vessel during the period of arrest will be treated as sheriff’s expenses
in Admiralty and Resolution Process costs under the IBC and paid out in priority from the sale proceeds of the ship if the company is liquidated or be accorded priority in the resolution plan as resolution processcosts.

III. If the owner of the vessel (corporate debtor) is in liquidation at the time the Plaintiff commences Admiralty proceedings in rem for arrest of the vessel.

An action in rem can be entertained even at the stage of liquidation of the corporate debtor as the claim is against the res and not against the corporate debtor. The Plaintiff is considered as a secured creditor once he obtains an order for arrest and can enforce the security in accordance with the applicable law, i.e., Admiralty Act as given under
Section 52(4) of the IBC. The provision entitles the Plaintiff to apply for sale of the ship to realize maximum value to satisfy his claim, as it is only a judicial sale by an Admiralty Court that is recognized the world over as extinguishing all maritime liens against the res and thereby giving a clear title to the buyer. The explicit bar under Section 33(5) of the IBC would not apply as it necessarily means a suit in personam and against the corporate debtor.

Issue II

In regards to the question as to whether the leave of the Company Court under
Section 446 is to be sought for the proceedings under the Admiralty Jurisdiction, the learned Court made the following observations.

1.The primary question that had to be dealt with was whether the provisions of the Admiralty Act would have an overriding effect over the provisions of the Companies Act, 2013, and furthermore whether leave of the Company Court be required for the commencement or to entertain an action in rem under Section 446 of the Companies Act.

2. Companies Act is an Act relating to companies in general¹². It is a general law¹³. While Admiralty Act is a special law, consolidating matters of admiralty jurisdiction, legal proceedings in connection with vessels, their arrest, detention, sale and other matters connected therewith and incidental thereto. The Act vests Admiralty jurisdiction exclusively to certain High Courts only to entertain such actions. Applying the general principles of interpretation, Admiralty Act will override the provisions of the Companies Act as it is a special Act as well as a later enactment.

3. In consonance, the Court referred to Damji Valji Shah & Ors. v. Life Insurance Corporation of India¹⁴,which dealt with a conflict between the LIC Act which conferred exclusive jurisdiction on the Tribunal constituted under the said Act in respect of certain matters and Section 446(2) of the Companies Act which conferred exclusive jurisdiction on the Company Court to entertain or dispose of any suit or proceeding by or against a Company where a winding up order has been made or the Official Liquidator is appointed as Provisional Liquidator of the Company. The Court held that, the provision of the LIC Act being the special Act will prevail over the general Companies Act.

4. An action in rem is an action against the ship as a juristic person, independent of the company owning it. It is not an action against the company. Thus a Court winding up the company will not have the admiralty jurisdiction to entertain or dispose off a suit in remagainst a ship which is only conferred to certain High Courts. Hence, by this reasoning itself, it is clear that no leave is required as per Section 446(1) of the Companies Act due to the lack of Admiralty jurisdiction of the Company Court. (Pratibha Shipping Co. Ltd.
(in liquidation) v. Praxis Energy Agencies S.A.¹⁵)

5. The Claimant is only a secured creditor to the extent of value of the ship and not in respect of the other assets of the company in liquidation. The maritime claimants stand on a different pedestal as far as the ship and its sale proceeds are concerned with respect to the general creditors of the company. The integrity of both types of creditors would be preserved as the Admiralty Court would invite all other claims who will then be considered as secured creditors in respect of the sale proceeds. The integrity of both has to be protected and of equal concern¹⁶.

6. The priorities under Section 10 of the Admiralty Act will prevail over Section 529 and 529A of the Companies Act. Section 10 is a special provision relating to the priorities in respect of the sale proceeds of a ship whereas, Section 529 and 529A relates to priority of general class of workmen in respect of general assets of the company. Furthermore, such sale of ship cannot be treated as void under Section 537 of the Companies Act.

7. The Court distinguished its earlier pronouncement in Praxis Energy Agents SA v. Pratibha Neera¹⁷,as Admiralty Act had not come into force when the matter was reserved for judgment, and it can no longer apply considering the position in light of the Admiralty Act, 2017.

Comments and Conclusion

The judgment by Justice K.R.Shriram provides a comprehensive analysis of the current conflict between legislations and the inconsistencies between the provisions. It is a commendable step in reconciling two fields of law which have been perceived to be at odds with each other.  With the enactment of the Admiralty Act, several issues in respect of maritime claims have been embargoed with a laid down legislation, yet there still exist a few grey areas which are yet to be addressed.

The Court has applied the principle of harmonious construction to resolve the conflict between the legislations. The rule of harmonious construction is the thumb rule to interpretation of any statutes. The Apex Court in the landmark case of C.I.T. v. Hindustan Bulk Carriers¹⁸, held that it must avoid head on clash of seemingly contradicting provisions and must construe the contradictory provisions so as to harmonize them. A provision of one legislation cannot be used to defeat the provision contained in another. If the Court is unable to find a way to reconcile their differences in the contradictory provisions, the Courts must interpret them in such a way so that effect is given to both the provisions as much as possible. In the present matter, the Court has applied the principle of harmonious construction to resolve the conflict that exists between the Admiralty Act and IBC, as well as the Companies Act. By analysing the object and purpose of the legislation, various scenarios have been laid down to harmonize the provisions of IBC vis-a-vizthe Admiralty
Act in the matter of protecting the right in remof the maritime claimants and at the same time giving effect to the objective of IBC for revival and continuation of the Corporate Debtor through recognizing the moratorium provisions of IBC and facilitating the CIRP.

The Court taking due note of the non-obstanteclause, first attempted harmonious construction intending to give effect to both statutes bearing in mind the purpose and policy underlying them. If the conflict is resolved, then there is no application of the non-obstanteclause since there is no inconsistency between the legislations¹⁹.Only in the event the conflict is not resolved, the IBC will prevail because even though the Admiralty Act is a later Act, it does not contain a non-obstanteclause.

However, there may arise situations in which the harmoniously construed provision is abused for individual expedient satisfaction of claims. For example, in order to secure an order of arrest, the claimant merely is required to present a prima facie case of identifying the ship and establishing a maritime claim. Claimants with frivolous claims may secure an order of arrest to be considered as secured creditor quathe vessel as per IBC. This might defeat bona fideclaims by reducing their claim and prejudicing their rights. It is also unclear whether the judgment is to be interpreted to the extent so as to see whether the rights of secured creditors under IBC would be provided to maritime claimants as well. Similarly, financial institutions may see this judgment as an embargo over their rights under IBC and may therefore proceed to commence admiralty actions for realization of their security.

Throughout time, the scope of maritime industry has been widened to cover the interplay between several legislations while highlighting the special nature of maritime and admiralty law. The judgment is in consonance with the international principle of universalism, which encourages the countries dealing in the maritime industry to allow admiralty creditors to participate in the owner/debtors insolvency proceeding without prejudicially restricting admiralty Jurisdiction²⁰.This effort of the Court to interpret and harmonize the provisions of IBC and Admiralty Act, is a step towards serving the interests of all stakeholders under both statutes and would be consistent with the objectives of both acts and to give effect to the same.

Foot Notes:

1.  DamjiValji Shah &Ors. v. Life Insurance Corporation of India & Ors. (AIR 1966 SC135).

2.  Ashoka Marketing Ltd. v. Punjab National Bank ((2019) 213 Comp Cas 61 Bom.).

3.  ICICI Ltd. v. MFV Shilpa (2006) 10 SCC 452).

4.   Duncans Industries Ltd. v. A.J. Agrochem ((2019) 9 SCC 725).

5.   Swiss Ribbons Pvt. Ltd. v. Union of India (2019 (1) KLT OnLine 3144 (SC) = (2019) 4 SCC 17).

6.  Solidaire India Ltd. v. Fairgrowth Financial Services Ltd. ((2001) 3 SCC 71.

7.  Ram Narain v. Simla Banking and Industrial Company Ltd. (AIR 1956 SC 614).

8.  Ashoka Marketing Ltd. v. Punjab National Bank ((2019) 213 Comp Cas 61 Bom).

9.  Employees Provident Fund Commissioner v. Official Liquidator of Esskay Pharmaceuticals

     Ltd.(2011 (4) KLT SN 127 (C.No.139) SC = (2011) 10 SCC 727).

10.  In re ARO Company Ltd. (1980) 1 Ch 196 (C.A.).

11.  Nigel Meeson and John A. Kimbell, Admiralty Jurisdiction and Practice (5th Edition, 1993).

12.  DamjiValji Shah & Ors. v. Life Insurance Corporation of India &Ors. (AIR 1966 SC135).

13.  International Coach Builders Ltd. v. Karnataka State Financial Corporation (2003 (1) KLT SN 91
(C.No.126) SC = (2003) 10 SCC 482).

14.  Supra.

15.  Pratibha Shipping Co. Ltd. (in liquidation) v. Praxis Energy Agencies S.A. (2019 (5) CTC 450).

16. Industrial Credit and Investment Corporation of India Ltd. v. Srinivas Agencies & Ors.
((1996) 4 SCC 165).

17.  Praxis Energy Agents SA v. Pratibha Neera (2018 SCC Online 957).

18.  C.I.T. v. Hindustan Bulk Carriers (2003 (1) KLT OnLine 1155 (SC) = (2003) 23 SITC 5 (SC)).

19.     Central Bank of India v. State of Kerala (2009 (1) KLT SN 53 (C.No. 58) SC = (2009) 4 SCC 94).

20.       UNCITAL, UNCITRAL Model Law on Cross-border Insolvency with Guide to Enactment and Interpretation (1997) <https://www.uncitral.org/pdf/english/texts/insolven/1997-Model-
Law-Insol-2013-Guide-Enactment-e.pdf> accessed last 25 May 2020.

Wage Code Rules if Implemented --
Baby will be Washed Away with Bath Towel

(By Thampan Thomas, Former Member of Parliament, a Lawyer of Supreme Court,
National Secretary H.M.S., Advisor of Workers Group in ILO.)

The Wage Code is a part of proposed legislation to change the 41 Central Labour Laws in existence and to codify them into 4 Labour Codes namely The Code on Wages, The Code on Industrial Relation, Code on Social Security and Code on Safety. Out of which one code namely the Wage Code alone has been passed by the Parliament and given assent by the President. Now by the above notification and approval of the rules are in the process of implementation of Wage Code alone. This is not proper and is prejudicial to the interest of all concerned. As a part of the codification all the codes and its rules have to be adopted at one time, as it changes the approach, jurisprudence and aims and objectives of the fundamental nature of labour law. The thorough changes that have to be taken on one transaction with proper assessment of annulment of existing laws. Then only the right of the parties can be safe guarded in the light of judicial scrutiny, ILO Conventions, Parliament Debates and Legislations. Therefore, singling out one code alone and implementation of the same will have adverse effect on other codes and state laws.

The Labour Laws are on Concurrent List of the Constitution of India enabling Central and State to legislate on labour subject. On implementing the labour codes by the Central Government the federal nature of the Constitution will be subverted.

The proposed Rules and Code are ultra viresto the Constitution of India specifically on the question of socialism, equality and equity adopted in the preamble. As well as Article 14, 16, 19 in the Fundamental Rights, Article 39,42 in the Directive Principles and Article 309 and 311 of Part XIV of the Constitution of India.The arbitrary power for the Government to decide matters relating to wages of workers are negation of Multilateralism and Tripartism and Collective Bargaining.

Minimum wages are to be fixed basing on the constitutional commitment. Article 42 provides for wages basing on a living wage and decent standard of life and full enjoyment of leisure, social and cultural opportunities. Fixing up a minimum wage with a rider for floor wage will run against the constitutional directions. Though in the Chapter 2 Rule 3 in the Minimum Wages an endorsement is given referring to Workmen represented by Secretary v. Management of Reptakos Brett. And Co. Ltd. and Anr. (1992 (1) KLT OnLine 930 (SC) =
AIR 1992 SC 504) just opposite to that dictum is provided in the said rules. The dictum laid down in para 10,12, 13 and 14 of the judgment are not followed. It read as follows:

“The wage structure which approximately answers the above six components is nothing more than a minimum wage at subsistence level. The employees are entitled to the minimum wage at all times and under all circumstances. An employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry.

A living wage has been promised to the workers under the constitution. A ‘socialist’ framework to enable the working people a decent standard of life, has further been promised by the 42nd Amendment. The workers are hopefully looking forward to achieve the said ideal. The promises are pilling-up but the day of fulfilment is nowhere in sight. Industrial wage looking as a whole-has not yet risen higher than the level of minimum wage.”

The amendment in the Minimum Wages Act and putting in the Code and Rules as Chapter 3 is only annulling the present provisions. Of course it has annulled the schedule industry so as to make it universal. Yet it not made clear where it is applicable and how it implemented for unorganised worker in agricultural sector, domestic sector, forest workers and other daily waged contract employee. The implementation of hourly based wages, No Work No Pay and contract wages are permitted. All the safeguards of minimum wage or decent wage will be given a go by. When framing the wage code and its rules the decent work agenda is to be taken into account and rules and regulations are to be formed with that aim not by giving absolute powers to the employer to enter into contract with wage earners and exploit them.

The determination of minimum wages crucially depends on calorie requirement. The expenses on non-food essentials like education and healthcare are on the higher side. The rules are not taking care of the children and aged people. The dependent parents ought to have been considered in fixing minimum wage.

The proposed technical committee for categorization is not necessary. This will cause time delay and will deny the right of skill upgradation attained by the workers. The revision of dearness allowance should be based on consumer price index. Fixation of 12 hours at a stretch will cause difficulty for the workers. It should 10 hours 30 minutes only.

The rules are giving away the powers of collective bargaining on wages. The Tripartite mechanism will come to an end. Arbitrary power to government and employers right to fix up wages on hourly basis or on contract will take away the right of getting decent livelihood and improvement in the living condition of the workers. While abolishing the present Minimum Wages Act better provisions have to be there in the wage code and its rules enabling the workers to get their right as guaranteed. It is the accepted principle the wages that are been received shall by no way be reduced for worker.

The definition of wages does not include the actual payments which worker gets at present including that of deferred wages. The calculation of wages deleting other statutory payments and making it 50% will not make it sufficient to increase the wages in tune with the requirements of the worker and wages related to the price and production cost. India is one of the lowest wage paid countries in the world. Removing items from the wage component is not for the betterment of the workers but enables to fix a wage far below to living wages. The definition and approach to wages should be in accordance with the Hon’ble Supreme Court decision in State of Punjab v. Jagjit Singh (2016 (4) KLT SN 62 (C.No.72) (SC) as decided on 26th October 2016 and all other connected cases.

The worker and the employee two definitions given has to be put as one in the matter of Wage Code in the light of the decision of the Hon’ble Supreme Court in Bangalore Water Supplycase reported in (1978 KLT OnLine 1020 (SC) = AIR1978 SC 548) where it is held that
only persons who are having authority to appoint and dismiss like that of a Managing Director or the top personels alone can be differentiated from the worker. Therefore the two definitions given for worker and employee are to be changed.

Fixation of floor wage may become contrary to Minimum Wages Act and National Minimum Wages etc. The concept of floor wage will go against the guarantees given under the Minimum Wages Act and other protections by various statutes in existence. The consultation of an advisory committee will go against the factual positions. The period fixing for monthly wages should include 30 days of daily wage or hourly wage so as to enable the workers to get the right of paid weekly off.

The bonus paid customary or on production basis shall not be denied. Workers should  be given  opportunity to get  higher bonus than that of maximum in case the employer can afford by way of settlements. The balance sheet should be capable for examination by the worker or workers association.

The constitution of Central Advisory Board provided in Chapter 6 is giving arbitrary powers to the Board. The Constitution is imbalanced. There is no proper representation for the workers. The Government being an employer of workers representatives of Government will have to be considered as representative of employers. The representation of the workers should be increased.

Clause 29 is annulling the constitution of a wage board for the working journalist and newspaper employees which is covered by Act 45 of 1955. The overlapping powers of the advisory board will take away the right of a wage board constituted under statutory provisions which is deciding the service conditions of the working journalist and other employees avoiding a strike or other forms of collective bargaining through properly constituted machinery. This is a power which is far in excess.

No heed is paid to Equal Remuneration Act in existence though it is abolished. There is no any provision to restore the right of equal remuneration. It is not explained in the code what will be the protection for equality and equity. It is the right of a worker to get equal wages for equal work which is guaranteed under Article 14 and 16 of the Constitution of India. The definition of contract and contract labour enables for further discrimination and providing opportunity for different pay for the same work.

The provisions provided in Chapter 7 are taking away the jurisdiction of labour courts and industrial tribunals in deciding claim petitions under S.33(c)(2). The rules in Chapter 8
give an opportunity to escape scrutiny of records by self certification. There should be safeguards to get true accounts and statements from the employers to the satisfaction of all concerned.

The miscellaneous provisions contained in Clause 57 and 58 of Chapter 9 of the rules are beyond its jurisdiction. The technical committee mentioned therein cannot be constituted disregarding the provisions of Working Journalist Act. By making the above rules the Acts in existence can never be repealed or denuded. It is beyond the competence of rule making authority and therefore lacks total jurisdiction.

It is the well established law that the principal employer is responsible for the contractor for any violation of the provisions of the labour law that shall not be diluted in any manner.

If the wage code alone is implemented by enacting the rules mentioned above and if the other codes are not enacted many of the provisions of this rules will encroach on the right of other codes yet to be passed. This is an illegal action and is capable of judicial interference.

Inspection and implementation of labour rights by Welfare Officers, Enforcement Officers are given a go by and self certification are provided. The Inspector Raj is a myth and the appointment of facilitator instead of inspection coupled with self certification will end in denial of labour rights.

The Multilateralism - Tripartism is changed to authoritarianism and arbitrariness for fixing wages. The State power which is imposed may be challenged before the Constitutional court under Article 226 of the Constitution instead of conciliation, mediation and adjudication.

The rule making authority has not considered the impact of recommendations of first national labour commissions under the leadership of eminent Judge Justice Gajendra Gadkar and also the various recommendations and decisions made by the Indian Labour Conferences.

The ILO Conventions ratified by Governments as like that of 81 with regard to inspection and other International covenants to which the Government of India is a party such as Global Job Pact, Decent Work Agenda and Millennium Goal etc., are also not taken into account while enacting these rules. The Core Conventions 87 and 98 of ILO are also violated by taking away collective bargaining right of the workers.

The poor state of affairs and lowest pay given to the workers of India had occasion to be discussed in the Standard Setting Committee of ILO. If the Act and Rules in the present nature is implemented that will result in international criticism of denial of workers right. Already such serious criticisms are raised in the International Forums.

If the wage code is implemented it will bring a new system introducing the theory of Master and Servant relationship, Divine Right Theory and Hire and Fire. This will lead to the formation of in-equal society and the living conditions of working class will be deteriorated. An opportunity for unbridled exploitation of the workers will arise. The process of Codification and Legislation shall not end in a situation where baby washed away with bath towel.

Indigenous People Participation in Investment Negotiation :
A Case for Mitigating Rising ITA Claims in Resource Extraction

(By Bhagyalakshmi R., Assistant Professor, Department of Law,
School of Legal Studies, Central University of Tamil Nadu)

Abstract

The era of post neo liberalism has been structurally identified as a crucial period in the global regime in view of the fact that it encompasses significant developments in the economic landscape through rampant policies for industrial growth, market efficiency and attracting adequate investments. The investment paradigm in the Asian sphere is also advancing its roots by attracting potential investments in the domestic as well as International regime through bilateral or multilateral investment treaties. The investments channelled through the treaties are majorly used in resource extraction by contracting out essential utilities which may even extend to the lands inhabited by tribal population. There are specific instances of blatant violations of individual and collective rights of tribal people by expropriating their lands for facilitating resource extraction through forcible displacement without obtaining their free or informed consent. This runs in conflict with the International norms governing the protection of rights of tribal population which is inclusive of United Nations Declaration on the Rights of Indigenous People (UNDRIP), 2007 and International Labour Organisation Convention concerning Indigenous and Tribal Peoples, 1989. The State as guardian of the rights in such instances is equally tied by the obligations envisaged under the Investment treaties as the host State in an investment treaty is bound by obligations to ensure investment protection to the foreign investors in observance of fair and equitable treatment. However, at the same time the investment treaties, by and large are devoid of any provisions for protection of indigenous or tribal population rights and the specific enforcement of the treaty through Investment Treaty Arbitration eventually leads to exclusion of the merits of tribal people rights. The leading examples from the Asian Regime can be the Ras Al Khaimah Investment Authority (RAKIA) Investment Treaty Arbitration Claim against India as well as the Vedanta case. The United Nations Report of the Special Rapporteur on the Rights of Indigenous People, 2016 has highlighted the issues surrounding the conflict scenario and specifically enlisted the long term challenges of the host State. Hence the paper analyses and explores the idea of conjoining the host State’s obligation under Investment treaties and the Indigenous people’s rights, the International norms which are running parallel to each other. The study intends to map the possible inclusion of tribal rights protection provision in the Investment treaties and devising domestic legislation to enhance the development activities without any exclusion of rights of the indigenous inhabitants in the Asian Regime with a critical focus on India.

Keywords: UNDRIP, Investment Treaty, Resource Extraction, Tribal Rights, Investment Treaty Arbitration

I.                                                                               RIGHTS AND OBLIGATIONS: AN INVERSE PARADOX IN INVESTMENT LAW AND
TRIBAL RIGHTS JURISPRUDENCE

The economic landscape of India has undergone significant changes post neo liberalism. The advent of liberalisation policies in 1990s has resulted in industrial growth by envisaging greater practise of liberalising the licensing procedure, market efficiency and external sector gaining potential investments from the global regime as foreign capital and other resources¹. The investments in the regime are facilitated through bilateral, multilateral and free trade agreements (FTA), whereby treaty based protection are extended to investors of both the countries². The common characteristic of the BIT is its functional regime of providing specific rights. India since its first Bilateral Investment Treaty (BIT) with UK in 1994 has successfully entered into more than 80 BITs³. The BIT relation of India in the initial years was specifically a primary engagement with European regime (Netherlands, Denmark, France, Germany, Poland, Switzerland, Belgium, Sweden and Italy). Later it has been extended to developing and least developed economies as well. The interesting point to note is that the larger engaging of BITs is due to the potential benefits it carries along. The specific chapter on investment protection in the bilateral investment treaty framework provides for fair and equitable treatment clauses to enhance full protection for investment and security.

The clauses encompassed in BITs are by and large designed to promote investment inflows, management skills and technology transfer⁴. However the larger internalising of Investment treaties is not always a pro revelation since the investment on land and resource extraction has long standing negative impact on human rights of the people inhabiting such lands, specifically the tribal population.

The blatant violations of human rights of the indigenous and tribal population in the context of Investment treaties are largely reflected in the global as well as Indian regime. The global outlook gives compelling truth of derogations of obligations along with violation of rights. For example, the investment dispute of Ecuador pertaining to the failure of State’s obligation to provide full protection and security to the Oil and Gas Company on ground of protest by indigenous people dragged the issue to Inter American Commission on Human Rights as well as the Inter American Court of Human Rights. The Court opined that the State’s failure in obtaining free, prior and informed consent of the indigenous people in the matter has put their rights at stake⁵. Similar instance can be noted in Bear Creek Mining Corporation v. Peru⁶, wherein there was violation of FTA between Peru and Canada due to indigenous people’s resistance for mining concession in their land and led to the withdrawal of operations. The Indian regime has equally undergone derogations of obligations. The prime example would be the Investment Treaty Arbitration (ITA) claim against India raised by the Ras Al Khaimah Investment Authority (RAKIA). The proceedings were initiated on the grounds of State’s failure to observe the obligations undertaken in the treaty due to resistance of tribal inhabitants in the land.

The instances of conflicting rights and obligations, forms a growing concern in the International law since these rights as well as the obligations are accorded protection through customary as well as treaty law in the international realm. Hence the paper analyses and explores the idea of conjoining the host State’s obligation under Investment treaties and the Indigenous people’s rights, the International norms which are running parallel to each other. The study also intends to map the possible inclusion of tribal rights protection provision in the Investment treaties and devising as well as revisiting domestic legislation to enhance the development activities without any exclusion of rights of the indigenous inhabitants in the Indian Regime. The first part of the paper tries to analyse the rights accorded to tribal inhabitants in the domestic regime of India through legislations as well as the International recognition of such rights. The second part is extensively engages with the regime of Investment treaties and its conflict with the tribal rights by evaluating the Investment treaties in the lights of tribal rights jurisprudence. The third part of the paper throws light on the case study of RAKIA ITA claim against India and the challenges it poses on the Indian Human Rights conundrum along with a critical reflection on the Vedanta case. The final part of the paper is an intensive effort to conjoin the parallel international norms to possibly avoid the conflicting scenario.

II. TRIBAL RIGHTS: GLOBAL AND INDIAN PERSPECTIVE

The theoretical analysis of tribal law through juristic lens reveals the distinct characteristics it holds. The classic context of human rights realm revolves around individual rights as the prime focus, whereas the tribal law lays emphasis on group life and communal living. The anthropological studies reveal that the tribal people are closely knit communities who pay homage to the past and can be accounted as a single social unit. These factors contribute to the recognition of tribal law as the law which regulates the individual and collective (community) rights. The hitherto individual rights are pre organised to be construed as the right which one possess and can be wielded on one’s own behalf whereas the collective right in contrast can be wielded non-individually through consensus or representations⁷. Though there is emerging confusions on demarcating the lines of individual and collective rights in its context⁸, the collective land rights are predominantly recognised in the tribal rights jurisprudence. The rights in its collective form are symbolising the objective of conferring self governance and autonomy through representation obtained through tribal consensus. The embodiment of these individual and collective rights in international agreements and domestic legislations holds relevance in the event of alleged violations. Hence this session essentially deals with the analysis of Global and Indian perspective on tribal law.

A. Recognition of Tribal Rights in the Global Regime

The statistics in the global regime reveals that five percentage of the world population is tribal inhabitants and 370 million indigenous inhabitants are recognised so far. They are squarely represented as forming fifteen percentage of the extremely poor and interestingly sixty five percentage of the land is under indigenous customary ownership⁹. The statistics reveal the undisputed existence of tribal inhabitants as a considerably relevant population. The human rights framework inherently encompasses protection and promotion of tribal people’s rights through specialised agencies as well as International instruments¹⁰. The specialised agencies or institutions are fundamentally engaged in protection and promotion of indigenous people’s rights and also envisages representation of their interests as well as situations at the international level. The major examples would be Permanent Forum on Indigenous Issues, Special Rapporteur on Indigenous Rights constituted under United Nations Framework. Apart from these institutions, there are various International instruments adopted for the development as well as protection on Indigenous People’s rights.

The development of specialised instruments in the International regime can be first traced back to the International Labour Organisation Convention Concerning Indigenous and Tribal People in Independent Countries of 1989¹¹. Currently, the number of State’s ratification and accession to the Convention is limited to twenty two in number. However, the Convention has gained the status of Customary International Law, since the States which has not even ratified the Convention is still referring to its provisions on issues related to tribal rights¹². The provisions of the Convention specifically enforce the State’s to recognise the cultural and spiritual relationship of tribal people with the land they either occupy or use¹³. Further, Article 14 of the Convention also states the duty of the State to recognise the rights of ownership as well as possession of the indigenous people over their traditionally occupied land. Thus the Convention specifically accounts for protection of tribal land rights.

Added to this, a widely acclaimed special instrument for tribal rights protection under the United Nations Framework came into existence in 2007 which is prominently known as United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). The declaration has been the result of General Assembly Resolution in the United Nations¹⁴. Despite the General Assembly Resolution being non binding, the declaration has firm grounding by its acceptance by majority of the nations and thereby gaining the status of Customary International Law¹⁵. The preamble of the UNDRIP specifically states that the rights of the Indigenous People with respect to their traditional homage (social structures, culture, political and economical system, traditions) has to be respected and promoted. This in context encompasses the indigenous people’s right to their resources, land and territory. The UNDRIP provision under Article 25 strengthens this vision and states that the inherent rights of the indigenous people with respect to their traditionally owned or used or occupied land has to be maintained and strengthened. Hence the UNDRIP provision is more clear in its context in comparison with the Article 13 of ILO Convention, 1989. UNDRIP envisages a generalisation clause which is even substantiated by its own Article which runs as:

“Indigenous people have the right to own, use, develop and control the lands, territories and resources they possess by reason of traditional ownership or other traditional occupation or use.”¹⁶

Apart from these specialised instruments, there are general human rights norms envisaged under International Covenant on Civil and Political Rights, (ICCPR) 1966, International Covenant on Economic, Social and Cultural Rights (ICESCR) 1966 and International Convention on Elimination of All Forms of Racial Discrimination (ICERD) 1966 which equally advocates for human rights of indigenous people. Similarly there are Regional agreement like African Charter on Human and People’s Rights, 1981 and American Convention on Human Rights which stands for human rights protection of Indigenous people.

B. Tribal Rights In India

The tribal population in India accounts for about 8.2 percentage of the total population¹⁷. The major tribal settlement in India is in the North-Eastern States as well as in the central and Southern regions¹⁸. India has extended its commitment to tribal rights protection in International sphere by its vote in favour of UNDRIP, 2007, however the State is not party to ILO Convention 1989¹⁹. The idea of protecting the rights of indigenous people were primarily a specific concern and significant legislative and policy framework were developed in due course. The domestic landscape of tribal rights in India, firstly, draws our attention to fundamental law of the land, The Constitution of India, 1950. The indigenous people are primarily mapped within the administrative term Scheduled Tribes²⁰. The Constitutional provisions and its applicability in matters concerning Scheduled Tribes can be extensively counted to 209 in number along with two Schedules²¹. The Part X of the Constitution under Article 244 and 244A deals with the administration of Schedule and tribal areas in accordance with Schedule V and VI. The power is extended to Governor of the State to make regulations governing Schedule and tribal areas. The Schedules draw its distinction on lines of governing jurisdictional areas. The fifth Schedule is inclusive of administration of Schedule Area in the peninsular region, towards the exclusion of north eastern States which are covered under sixth Schedule. Moreover fifth Schedule in the initial inception was administrated by provincial Governors with little authority for self governance whereas the sixth Schedule has given leverage for more autonomy through elected council for tribal people. The autonomy for self governance was decisive on factors viz. Ability to manage its own affairs and presence of non tribal population (which may directly or indirectly leads to subjugation of tribal inhabitants)²². Apart from this there has been adoption of various statutes internalising the Constitutional mandate governing tribal area.

Firstly, The Panchayat (Extension to the Schedule Areas) Act, 1966 has been adopted which pave way for decentralisation of tribal governance by extending the Part IX of the Constitution to the Schedule areas. The Act invigorated the ideal of setting up institutional self governance through democratic elections as contained in Part IX of the Constitution. It is functionally evident that the Act was devised in a manner to protect and safeguard the age old customs, cultural identity and resources of tribal inhabitants. The Act provides that before the initiation of acquisition of land for development projects or resettlement of inhabitants affected by such projects, there has to be consultation with the local bodies elected by the communities. The Act has been regarded a progressive development in favour of tribal rights, preservation of tribal culture and management of community resources²³.

In the similar context, yet another legislation was enacted in 2006, the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, which provides for measures related to ownership in forest land for the forest dwelling Scheduled tribes (STs) and Other Traditional Forest Dwellers(OFTDs). The individual States and Union Territories are vested with the implementation of the Act and the eviction of the STs and OFTDs from their respective land of occupation has to be made only after completion of administrative procedures governing recognition and verification in due course.

Though there are significant legal measures in the International and domestic regime for tribal rights and their protection, still on grounds of Investment treaties, resource extraction and development projects, there are crucial bypasses to the existing legal conundrum and blatant violations of rights which raises greater concern. The next part of the paper is dealing with the Investment Law paradigm and the bypasses on tribal rights.

III.  INVESTMENT  TREATIES  AND  TRIBAL  RIGHTS :  CONFLICTING  REGIMES

The Indian advancement in Bilateral Investment Treaties (BITs) is considerably significant and biggest amongst developing economies²⁴. BITs are enshrined to be the treaties made by countries for protecting investments made by investors of both the countries²⁵. The economic liberalisation has boosted the country to enter into BITs and the primary objective was to attract potential foreign investments. The Model BITs was enunciated by India to allure the world by exhibiting the fact that the country offers treaty based protection both substantially and procedurally²⁶. India has revised its Model BIT in 2015 on lieu of larger investment claims against the country and terminated a substantial number of its BITs. The key feature of the Investment Treaty of India is the incorporation of the clauses for Fair and Equitable Treatment (FET) as well as Full Protection and Security.

The fair and equitable treatment is largely a fluid concept and the interpretations vary from treaties to treaties²⁷. Perhaps the clarity of the clause effectuates the host State to undertake obligations imparting active measures to protect the investment which may stem from private parties or action of host State or its organs²⁸. The FET can be construed to be envisaging minimum standards of treatment under customary International Law which has to be taken into consideration by the host State. These necessarily advocates for predictable legal environment regulating investment which is the legitimate expectation of the investor. Over the period, the FET has been devolved to include (i) legitimate expectation of the investors (ii) transparency and stability (hi) non denial of justice and (iv) Prohibition of Coercion and harassment²⁹. The BIT also encompasses Full protection and Security clauses. The Model BIT of India, 2015 advocates for full protection and security³⁰. The clause inherently provides protection to the physical security of the investor’s assets. The rising investments disputes have put pleadings before the arbitrators and tribunal to construe the appropriate interpretation of full protection and security clause as a broader term or customary international norm or any other independent standard. However, the tribunal is decisive of the fact that the clause does not impose absolute liability on the State and only requires mere due diligence³¹.

It is undisputable that the FET clauses reinforces obligation on the host States which is equally tied by obligations for protecting the tribal rights. The functional similarity in both the regime is regarding the concept of right to protect the investor or the tribal inhabitant. The development projects are inherently tied with the resource extraction process on land that results in depriving the tribal people of their lands. The United Nations Report of the Special Rapporteur on the Rights of Indigenous People, 2016 has highlighted the issues surrounding the conflict scenario and specifically enlisted the long term challenges of the host State. The ILO Convention, 1989 under Article 16 stipulates that the eviction and resultant relocation of the indigenous people should be on exceptional circumstances and also specifically accompanied by their free or informed consent. The UNDRIP also advocates for the same and ensures that there is free, prior or informed consent³². The provision also envisages substantiation by agreement for just and fair compensation where return of tribal land is not possible. The leading cases in the International regime also evidence the same. In Mary and Carrie Dann v. United States³³, the Inter American Court of Human Rights observed that aboriginal land rights could only be extinguished with free and informed consent. Similarly the African Commission on Human and People’s Rights (ACHPR) has stepped a foot further and states the eviction of the Indigenous people cannot be justified on the ground of general interest of the community or public need³⁴.

The leading tribal rights jurisprudence in the Indian regime also reinforces the importance of tribal rights on land. The decision of Samatha v State of Andhra Pradesh and Ors.³⁵ruled in favour of tribal inhabitants and held that forest and tribal lands in the Schedule cannot be leased out to non tribal inhabitants or private industries. The precedent has been bypassed in light of the Land Acquisition Act which gave leverage to the Government for acquiring land for development needs. Consequently land acquisition disputes has pitched in and the Supreme Court of India decided that the government is the best judge to determine if a public purpose is served by an acquisition³⁶ and eased out the government from the obligation of looking into any other legislation for determining the propriety of their action³⁷. The decision enlarges the discretion of government in acquiring land and eases the burden of government in acquiring lands of even tribal inhabitants in derogation of PESA and fifth Schedule of the Constitution. Hence these bypasses have significant impact on tribal rights and protection in lieu of economic development. The next session presents two such instances of blatant tribal right violations through the rough shade of investment treaties.

IV. VIOLATIONS IN CONTEXT: RAKIA INVESTMENT TREATY ARBITRATION CLAIM AND VEDANTA CASE

There is rising investment claims against the country on grounds of investment protection. The tribal protest against investment treaties and resource extraction has led to the non fulfilment of the contractual obligations and the investor resorting to claim for investment protection through arbitrations. Consequently the State has been criticised for giving primacy for economic advancement at the cost of the rights of indigenous people. The remarkable examples of violations of host States’ obligation to provide investment protection as well as protection of tribal rights in the Indian regime can be the RAKIA Investment Treaty Arbitration Claim and Vedanta Case.

A. RAKIA Investment Treaty Arbitration Claim

In 2007, the Andhra Pradesh Mineral Development Corporation under the State of Andhra Pradesh has entered into a Memorandum of Understanding (MoU) with the Ras Al-Khaimah Investment Authority (RAKIA), Government of Ras Al-Khaimah for the construction of an alumina refinery and thereby bauxite mining across 1,612 hectare of forest land (Jerrela block of Chintapalli Reserve Forest) and undertaking supply of 224 million tonnes of bauxite³⁸. According to the MoU, the Andhra Pradesh Mineral Development Corporation was obliged to supply bauxite to ANRAK Aluminium (a joint venture formed by RAKIA holding 70% of the share and India’s Pennar group holding 30% of the share)³⁹. However the rising environmental activism and tribal protest has stressed the project and the State could not fulfil the contractual obligations and the deal was structured in a way without any potential benefits to the tribal people. Consequently RAKIA has initiated Investment Treaty Arbitration claim against India on grounds of failure of providing investment protection under the Bilateral Investment treaty between India and UAE. The Claim raised by RAKIA accounts for about US$ 44.71 million. The matter is still pending and awaits decision. The case is significantly a backlash to the investment commitments as well tribal rights protection in India.

B. Vedanta Case

The case pertains to a project undertaken by the Odisha Mining Corporation and Vedanta Industries for mining bauxite, the raw material for producing aluminium, from the Niyamgiri Hills for the Vedanta Aluminium Refinery in Lanjgarh⁴⁰. The inherent concern in lieu of environmental harm and disturbance of tribal life (Dongria Kondh Tribals) whose culture, beliefs and existences are deeply entrenched in Niyamgiri hills⁴¹ led to protest against the operation of the project. The matter was raised to the Supreme Court of India and the Court decided that the diversion of forest land for development project has to be accorded only with the consensus of local bodies (Gram Sabha) elected by the communities as per the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006⁴². The Court observed that there was no such active consultation with the Gram Sabha on the matter and the issues were raised as individual and community claims. Hence the honourable Court has directed the State to obtain the Gram Sabha resolution on the matter which is decisive in granting clearance of project by the respondent and Vedanta Industries to envisage a new proposal for the project. The decision is a remarkable precedent in favour of tribal rights however the Court has not given substantial importance to the Central Empowered Committees Report⁴³ which states that the mining operation is disastrous to Niyamgiri Tribals. Unfortunately the decision only demanded for a temporary suspension of the project. Added to this, The Odisha Mining Corporation in 2016, has filed an Interlocutory Application before the Supreme Court to review the 2013 Judgment on grounds stating that (the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 and its rules does not mandate the requirement of obtaining Gram Sabha consent on matters pertaining to use of forest land, if the State Government deems fit that the rights of the tribal people has been settled and the practise of stoppage of mining cannot be perpetually in force⁴⁴. The matter has been posted for three Judge Bench for hearing and is still sub judice.

The two Case Studies inherently pose probative questions over the implementation of the domestic and International Norms on protection of Tribal rights. Similarly the State’s obligation in lieu of Investment Treaties is also on derogation due to the lack of meaningful consultation before initiation of development projects in tribal land. The co­existence of rights and obligations deduced from tribal law and investment treaties are achievable through a functional incorporation of the tribal rights protection in the investment treaties. The next session is entailing a discussion over the scope of such a possibility

V. CONCLUSIONS AND SUGGESTIONS

It is quite undisputable that the nation’s advancement encompasses a twin regime. On one side, there is a rising need to steer economic development. The possible interventions could be attracting adequate foreign and domestic investment by regulating market and fostering competition. At the other side, the commitments for protecting human rights have to be strengthened. Over the years, the concept of development is squarely delimited to the extent of economic development and there is a substantial neglect of overall societal development which essentially encompasses human rights framework. The economic development which the State intends to achieve through resource management and extraction should not stunt the development rights of tribal inhabitants. The mitigation of rising conflict of tribal protection and host State’s obligation is only possible through the convergence of parallel international norms.

The inclusion of indigenous people’s provision in the investment treaties is beneficial on account of various reasons. It enhances the scope for more opportunities in the trade front for cross border transactions. Similarly meaningful consultation with the indigenous people during negotiation of investment treaties eases the tension of obtaining their consent for resource extraction. The added benefit in such instances is that the investors are assured of economic certainty and thus potentially leads to the attraction of more investors in the process. The leading example is Canada’s negotiating priority of including a specific chapter for the Indigenous people in the North American Free Trade Agreement (NAFTA). The Canadian Free Trade Agreements in its provisions has specifically enlisted a number of exceptions and reservations for aboriginal people which is predominantly known as ‘Carve Outs’. The intended objective was to protect the rights and prioritise trade that benefits aboriginal people. Similarly Canada has proposed sectoral reservation prioritising the rights and preferences of aboriginal people over the investor rights. Hence the Canadian practise can be adopted as a successful template for investment negotiations for Treaties protecting the rights of indigenous people. The probable suggestions for convergence of both the investment regime and protection of tribal rights are summarised as follows:

•    The BITs should specifically incorporate provisions for tribal rights protections. Even the Model Bilateral Investment Treaty of 2015 lacks any specific
provision for tribal rights. The useful template for the purpose can be the practise of Canada.

•    The negotiations of bilateral investment treaties should be in consultation with the tribal inhabitants, if at all, their lands are involved in the investment
regime as undertaken in Scheduled Tribes and Other Traditional Forest Dwellers
(Recognition of Forest Rights) Act, 2006.

•    There has to be measures developed for reaffirming clarity in the domestic
legal regime for tribal rights protection, since the legislative provisions of various
Statutes may conflict.

Foot Note:

1.       Atul Kohli, “Politics of Economic Growth in India 1980-2005 Part II: The 1990s and Beyond” (2006), Economic And Political Weekly at 1361 See also OECD Background Paper, “Opportunities and Challenges for Investment in India” (2004) at 5.

2.     For a general discussion see R DOLZER AND C SHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW, (Oxford University Press, 2008).

3.     Department of Economic Affairs, India, (1^st February 2019) online: < https://dea.gov.in>

4.     Supra Note 2.

5.     Burlington Resources Inc. v. Republic of Ecuador (2010) ICSID Case No. ARB/08/5 See also Sarayaku v Ecuador, Inter American Court of Human Rights (2012).

6.     ICSID Case No. ARB/14/21.

7.     Allen Buchanan, “Role of Collective Rights in the Theory of Indigenous Peoples Rights” (1993) 3 Transnational Law and Contemporary Problems at 93.

8.     Ibid at 91.

9.     Indigenous Peoples Overview, World Bank Report (24th September,2018) online:
< www.worldbank.org> (accessed on 3rd February 2019).

10.  Katja Gocke, “Protection and Realisation of Indigenous People’s Land Rights at the National and International Level” (2013) 5(1) Goettingen Journal of International Law at 124.

11.  Hereinafter “The International Labour Organisation Convention Concerning Indi-genous and Tribal People in Independent Countries of 1989” is referred to as “ILO Convention,1989.”

12.  S.J.Anaya, “International Human Rights and Indigenous Peoples: The Move Towards Multicultural State” (2004) 21 Arizona Journal of International Law at 13.

13.  Article 13 of the International Labour Organisation Convention Concerning Indigenous and Tribal People in Independent Countries, 1989.

14.  GA Resolution 61/295 Annex, UN Doc A/RES/61/295.

15.  M Barelli, “The Role of Soft Law in the International Legal System: The Case of the United Nations Declaration on the Rights of Indigenous People” (2009) 58(4) International and Comparative Law Quarterly at 957.

16.  Article 26 of United Nations Declaration on the Rights of Indigenous Peoples, 2007.

17.  Census of India, 2011, Ministry of Home Affairs, Government of India online: < https://censusindia.gov.in> (accessed on 8^th February, 2019).

18.  W.V. Grigson, ‘The Aborginal in the Future India”, (1944) 74 Journal of Royal Anthropological Institute of Great Britain and Ireland at 33.

19.  Pushkar Anand and Amit Kumar Sinha, Protecting the Rights of Tribals, The Hindu
(27^th February, 2017).

20.  Fifth and Sixth Schedule, The Constitution of India, 1950.

21.  C.R.Bijoy et al, “India and the Right of Indigenous Peoples Constitutional, Legislative and Administrative Provisions Concerning Indigenous and Tribal Peoples in India and their Relation to International Law on Indigenous Peoples”, Asia Indigenous Peoples Pact (AIPP) Foundation (2010).

22.  Apoorv Kurup, “Tribal Law in India: How Decentralised Administration is Extinguishing Tribal Rights and Why Autonomous Tribal Governments are Better”, (2008) 7(1) Indigenous Law Journal at 88.

23.  Ibid at 96.

24.  Prakash Ranjan, “India and Bilateral Investment Treaties- A Changing Landscape”
(2014) 29(2) ICSID Review- Foreign Investment Law Journal (Oxford University Press) at 491.

25.  Supra Note 2.

26.  Supra Note 24 at 504.

27.  Karen Mills, “Fair and Equitable Treatment in Investment Agreement”, 1st^t Annual Forum of Developing Country Investment Negotiation (Singapore, October 2017).

28.  Christopher Schreuer, “Full Protection and Security” (2010)1(2) Journal of International Dispute Settlement at 353.

29.  Supra Note 2.

30.  Article 3, Model Bilateral Investment Treaty of India, 2015.

31.  Supra note 28 at 353.

32.  Article 10, United Nations Declaration on the Rights of Indigenous Peoples, 2007.

33.  IACHR Case 11.140, 27th December, 2002.

34.  Centre for Minority Rights Development (Kenya) and Minority Rights Group on behalf of Endorois Welfare Council v. Kenya, ACHPR Communication No.276/2003,
4th February 2010

35.  1997 (2) KLT OnLine 1137 (SC) = AIR 1997 SC 3297.

36.  Daulat Singh Surana v First Land Acquisition Collector ((2006) 11 SCALE 482).

37.  Hukumdev Narain Yadav v. Lalit Narain Mishra ((1974) 2 SCC 133).

38.  Special Correspondent, A.P.Cancels Bauxite Supply Deal With Anrak, The Hindu
(23^rd December, 2015).

39.  Ibid.

40.  G.Seetharaman, ‘The Story of One of the Biggest Land Conflicts: No Mines Now, Is It All fine in Niyamgiri?”, The Economic Times,(18thApril, 2018).

41.  Geetanjali Sohu, “Mining in Niyamgiri Hills and Tribal Rights” (2008) 43(15) Economic And Political Weekly at 19.

42.  Orissa Mining Corporation v. Ministry of Environment & Forest &Ors. (2013 (2) KLT Suppl.53 (SC) = (2013) 6 SCR 881).

43.  Central Empowered Committee Report in I.A. No.1324 Regarding the Alumina Refinery Plant being set up by M/s Vedanta Alumina Limited at Lanjigarh in Kalahandi District, Orissa (2005).

44.  Zubair Nazeer and Rahul Chirmurkar, “Supreme Court Must Safeguard Tribal Rights Over Niyamgiri Hills in Odisha”, The Wire (March 2016) online: <https://thewire.in/government/supreme-court-must-safeguard-tribal-rights-over-niyamgiri-hills-in-odisha>

Crippling the Right to Silence of an Accused

(By S.K.Premraj Menon, Advocate, High Court of Kerala)

a. The three Judges’ Bench of the Supreme Court of India in Prahlad v. State of Rajasthan (2018 SCC OnLine SC 2548) seems to have significantly watered down the right of silence of an accused. The said case was one concerning the rape and murder of an eight year old girl child. The accused was the last person seen with her while purchasing sweets for her from a shop, after which she went missing. Her corpse was discovered the next morning. The Trial Court convicted the accused for offences under Section 302 of the Indian Penal Code and Section 4 of the Protection of Children from Sexual Offences Act, 2012 and passed the sentence of capital punishment. This was confirmed by the High Court of Rajasthan in the reference and the appeals filed by the accused were dismissed. The Supreme Court reversed the conviction under Section 4 of the Protection of Children from Sexual Offences Act, 2012 particularly due to lack of reliable material, anyhow, sustaining the conviction for murder, setting aside the capital punishment and sentenced the accused for life imprisonment. Para 9 of this judgment gives an interesting reading, which runs :

No explanation is forthcoming from the statement of the accused under Section 313 Cr.P.C. as to when he parted the company of the victim. Also, no explanation is there as to what happened after getting the chocolates for the victim. The silence on the part of the accused, in such a matter wherein he is expected to come out with an explanation, leads to an adverse inference against the accused.

b. It is imperative to have a fleeting glance of Section 313(3) of the Code of Criminal Procedure, 1973, which reads :

313. Power to examine the accused

(3) The accused shall not render himself liable to punishment by refusing to answer such question, or by giving false answers to them.

Section 313(3) of the Code of Criminal Procedure, 1973 corresponds to Section 342(2)
of the Code of Criminal Procedure, 1898 which read :

342. Power to examine the accused

(2) The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them; but the Court and the jury, if any may draw such inference from such refusal or answers as it thinks just.

The last portion of Section 342(2) of the Code of Criminal Procedure, 1898, viz., but the Court and the jury, if any may draw such inference from such refusal or answers as it thinks iust were consciously omitted in Section 313(3) of the Code of Criminal Procedure, 1973, based on Article 20(3) of the Constitution of India, which reads :

20. Protection in respect of conviction for offences

(3)No person accused of any offence shall be compelled to be a witness against himself.

c. The doctrine of the right of silence of an accused traces its origin in England, as a protest to the inquisitorial methods of the ecclesiastical Courts and is based on the Latin maxim nemo tenetur se ipsum accusaremeaning that no man is bound to accuse himself. The very principle of immunity from self-incriminating evidence is based on the ‘presumption of innocence’ and so long as the presumption remains as one of the fundamental canons of criminal jurisprudence, evidence against the accused should come from sources other than the accused. In England, the principle was first incorporated in the Criminal Evidence Act, 1898, which provides that though the accused is a competent witness on his own behalf, he cannot be compelled to give evidence against himself and his failure to give evidence in defence cannot be commented upon. The principle of protection against compulsion of self-incrimination was adopted in the Fifth Amendment to the Constitution of the United States of America as well, which contains, more or less, the same language as in Article 20 (3)
of our Constitution. The protection is afforded not only to an accused on trial but to all persons giving testimony. As accused may voluntarily elect to give evidence but if he elects not to give evidence in defence, this fact cannot be considered to his prejudice. As far as India is concerned, we have adopted the principle of ‘presumption of innocence of the accused’ as one of the cardinal principles of our criminal jurisprudence. The burden is on the prosecution to prove that a person is guilty of the offence with which he is charged. The accused need not make an admission or statement against his will or volition. He may stand to see what case has been made out against him and he is entitled to rely on the failure of the prosecution to establish the charge conclusively and beyond all reasonable doubts. This ‘presumption of innocence’ gave birth to the rule of immunity from self-incriminating evidence which is embodied in Article 20(3) of the Constitution of India, which enshrines the doctrine against self-incrimination. It is designed to protect the accused from being compelled by hope or fear to admit facts or deny them. No compulsion, either physical or moral could be used to extort any self-incriminating statement from an accused. The doctrine against self-incrimination in Article 20(3) should be construed with due regard for the inter-relationship between rights, since this approach has been recognized in the seven Judges’ Bench decision in Maneka Gandhi v. Union of India & Anr. (1978 KLT OnLine 1001 (SC)
= (1978) 1 SCC 248) wherein it was held that Article 21 of our Constitution requires afair, just and equitable procedure to be followed in criminal cases. Article 21 of our Constitution grants fundamental right to life and liberty and reads :

21. Protection of life and personal liberty

No person shall be deprived of his life or personal liberty except according to procedure established by law.

The extended prominence of Articles 20(3) and 21 of our Constitution after Maneka Gandhi v. Union of India & Anr. (supra) could be comprehended from a cursory glance of Article 359, which reads:

359. Suspension of the enforcement of the rights conferred by Part III during emergencies

(1) Where a Proclamation of Emergency is in operation, the President may by order declare that the right to move any Court for the enforcement of such of the rights conferred by Part III (except Articles 20 and 21) as may be mentioned in the order and all proceedings pending in any Court for the enforcement of the rights so mentioned shall remain suspended for the period during which the Proclamation is in force or for such shorter period as may be specified in the order.

Some of the aspects relating to right to silence came to be included in the Universal Declaration of Human Rights, 1948. Article 11.1 thereof reads :

11.1 Everyone charged with a penal offence has the right to be presumed innocent until proved guilty according to law in a public trial at which he has had all the guarantees necessary for his defence.

Article 9.1 of the International Covenant on Civil and Political Rights, 1966 to which Indiais a party reads :

9.1 Everyone has the right to liberty and security of person. No one shall be subjected to arbitrary arrest or detention. No one shall be deprived of his liberty except on such grounds and in accordance with such procedure as are established by law.

Articles 14.2 of the International Covenant on Civil and Political Rights, 1966 reads :

14.2 Everyone charged with a criminal offence shall have the right to be presumed innocent until proved guilty according to law.

Articles 14.3(g) of the International Covenant on Civil and Political Rights, 1966 reads :

14.3 In the determination of any criminal charge against him, everyone shall be entitled to the following minimum guarantees, in full equality :

(g) Not to be compelled to testify against himself or to confess guilt.

The right to silence has various facets. One is that the burden is on the State or rather the prosecution to prove that the accused is guilty. Another is that an accused is presumed to be innocent till he is proved to be guilty. The third is the right of the accused against self-incrimination, namely, the right to be silent and that he cannot be compelled to incriminate himself. There are also exceptions to this rule. For instance, the accused can be compelled to submit to investigation by allowing his photographs taken, voice recorded, his blood sample tested, his hair or other bodily material used for DNA testing, etc.

d. The doctrine against self-incrimination and how far it is embodied in Article 20(3) was considered by an eight Judges’ Bench of the Supreme Court in M.P.Sharma & Ors. v. Satish Chandra, District Magistrate, Delhi & Ors. (1954 KLT OnLine 1013 (SC) =
AIR 1954 SC 300) where the question which directly arose was whether a search and seizure of a document from a person against whom a First Information Report was lodged with the police amounted to compelling him to be a witness against himself within the meaning of Article 20(3) of the Constitution. The Apex Court considered the historical background of the doctrine and repelled the narrow interpretation that the doctrine against

testimonial compulsion was confined to the oral evidence of a person standing his trial for an offence when called to the witness stand, observing that there is no reason to confine the content of the constitutional guarantee to such a barely literal import and to limit it, would be to rob the guarantee of its substantial purpose and to miss the substance for the sound. The phrase used in Article 20(3) of our Constitution is ‘to be a witness’. A person can ‘be a witness’ not merely by giving oral evidence but also by producing documents or making intelligible gestures as in the case of a dumb witness or the like. ‘To be a witness’ is nothing more than ‘to furnish evidence’, and such evidence can be furnished through the lips or by production of a thing or of a document or in other modes. After observing that Section 139 of the Indian Evidence Act, 1872 was not a guide to the meaning of the word ‘witness’, which must be understood in its natural sense as referring to a person who furnishes evidence, the Apex Court proceeded to hold that every positive volitional act which furnishes evidence is testimony and testimonial compulsion connotes coercion which procures the positive volitional evidentiary acts of the person, as opposed to the negative attitude of silence or submission on his part and that there is no reason to think that the protection in respect of the evidence so produced is confined to what transpires at the trial in the Court room. The Court went on to state that the phrase used in
Article 20(3) is ‘to be a witness’ and not to ‘appear as a witness’, which follows that the protection afforded to an accused in so far as it is related to the phrase ‘to be a witness’ is not merely in respect of testimonial compulsion in the Court room but may well extend to compelled testimony previously obtained from him. It is thus available to a person against whom a formal accusation relating to the commission of an offence has been levelled, which in the normal course may result in prosecution. Later, having felt that some of the propositions of law laid down in M.P.Sharma & Ors. v. Satish Chandra, District Magistrate, Delhi & Ors. (supra) have been too widely stated, an eleven Judges’ of the Supreme Court considered the scope of Article 20(3) of the Constitution in State of Bombay v. Kathi Kalu Ogad (1961 KLT 74 (SC) = AIR 1961 SC 1808) and dealing with the interpretation of the words ‘to be a witness’ the Court observed that ‘to be a witness’ may be equivalent to ‘furnishing evidence’ in the sense of making oral or written statements, but not in the larger sense of the expression so as to include giving of thumb impression or impression of palm or foot or fingers or specimen writing or exposing a part of the body by an accused person for the purpose of identification. ‘To be a witness’ means imparting knowledge in respect of relevant facts, by means of oral statements or statements in writing by a person who has personal knowledge of the facts to be communicated to a Court or to a person holding an enquiry or investigation. A person is said ‘to be a witness’ to a certain state of facts which has to be determined by a Court or authority authorized to come to a decision, by testifying to what he has seen, or something he has heard and is not hit by the rule excluding hearsay, or giving his opinion, as an expert, in respect of matter in controversy. The Court held that the observation in M.P.Sharma & Ors. v. Satish Chandra, District Magistrate, Delhi & Ors. (supra) that Section 139 of the Indian Evidence Act, 1872 had

no bearing on the connotation of the word ‘witness’ was not entirely well founded in law and observed that it is well established that Article 20(3) is directed against self-incrimination by an accused person. Self-incrimination must mean conveying information based upon the personal knowledge of the person giving the information and cannot include merely the mechanical process of producing documents in Court which may throw a light on any of the points in controversy, but which do not contain any statement of the accused based on his personal knowledge. When an accused person is called upon by the Court or any other authority holding an investigation to give his finger impression or signature or a specimen of his handwriting, he is not giving any testimony of the nature of a ‘personal testimony’. The giving of a ‘personal testimony’ must depend upon his volition. He can make any kind of statement or may refuse to make any statement. But his finger impressions or his handwriting, in spite of efforts at concealing the true nature of it by dissimulation cannot change their intrinsic character. Thus, the giving of finger impression or of specimen writing or of signatures by an accused person, though it may amount to furnishing evidence in the larger sense, is not included within the expression ‘to be a witness’. Dealing with the question of compelled testimony the Supreme Court observed that ‘compulsion’ in the context, must mean what in law is called ‘duress’. The compulsion in this sense is a physical objective act and not the state of mind of the person making the statement, except where the mind has been so conditioned by some extraneous process as to render the making of the statement involuntary and therefore, extorted. The right to silence was later considered by a three Judges’ Bench of the Supreme Court in Nandini Satpati v. P.L.Dani & Anr.
(1978 KLT OnLine 1017 (SC) = (1978) 2 SCC 424),where the Supreme Court followed the earlier English laws and the landmark judgment of the American Supreme Court in Miranda v. Arizona (1966 (384) US 436) holding that the accused was entitled to keep his mouth
shut and not answer any questions if the questions were likely to expose him to guilt. This protection was available before the trial and during the trial. Regarding the exception to the
rule of silence of an accused in a criminal case, in Ritesh Sinha v. State of Uttar Pradesh &
Anr. (2019 (3) KLT 709 (SC) = (2019) 8 SCC 1),a three Judges’ Bench of the Apex Court  answering a reference went on to hold that furnishing of voice samples of the accused would not infringe Article 20(3) of the Constitution. The Court even went on to fill the yawning gap in the statute, making temporary patchworks, effective and workable and to sub-serve societal interests, considering the contemporaneous realities/existing ground realities, call of justice and principle of imminent necessity, stepping forward and directing that until explicit provisions are engrafted in the Code of Criminal Procedure, 1973 by the Parliament, a Judicial Magistrate must be conceded the power to order a person to give a sample of his voice for the purpose of investigation of a crime.

e. Coming back to the case of Prahlad v. State of Rajasthan (supra), the conviction was solely based on an adverse inference drawn by the Apex Court from the failure of the accused to provide explanation for the subsequent events, after he bought the sweets for the victim. Apart from the fact that the accused was the last person seen with the girl, the Court drew an adverse inference from the silence of the accused to convict him for murder. As held in Kanhaiya Lal v. State of Rajasthan (2014 (2) KLT Suppl.88 (SC) =
(2014) 4 SCC 715), the circumstance of last seen together does not by itself and necessarily lead to the inference that it was the accused who committed the crime. There must be
something more establishing connectivity between the accused and the crime. Mere non-explanation on the part of an accused, by itself cannot lead to proof of guilt against the
accused. A three Judges’ Bench of the Apex Court in Digamber Vaishnav & Anr. v. State of Chhattisgarh (2019 (1) KLT OnLine 3251 (SC) = AIR 2019 SC 1367) held that it is settled that the circumstance of last seen together cannot by itself form the basis of holding an accused guilty of the offence. In Navaneethakrishnan v. State by Inspector of Police (2019 (2) KLT OnLine 3143 (SC) = (2018) 16 SCC 161) it was held that despite, the last seen theory undoubtedly being an important event in the chain of circumstances that would completely establish and/or could point to the guilt of the accused with some certainty, that evidence alone cannot discharge the burden of establishing the guilt of accused beyond reasonable doubt and requires corroboration. As held in Reena Hazarika v. State of Assam
(2018 (4) KLT OnLine 3088 (SC) = AIR 2018 SC 5361), mere invocation of the last seen theory, sans the facts and evidence in a case, will not suffice to shift the onus upon the accused under Section 106 of the Indian Evidence Act, 1872 unless the prosecution first establishes a prima faciecase. As far as the laws prevailing in India, there is no express provision which mandates an explanation from the accused. Moreover, Section 313(3) of the Code of Criminal Procedure, 1973 embodies the right to silence of the accused. It can be safely inferred from the non-administration of oath to the accused before his examination under Section 313 of the Code of Criminal Procedure, 1973 that he is not under any compulsion to answer any questions made under the said Section. Section 313 of the Code of Criminal Procedure, 1973, in spirit, acts as an aid to the accused to explain or rebut any incriminating evidence against him if he deems fit. The Section also provides that answers given by the accused may be taken into consideration by the Court. This makes it even more important that the accused must answer only when he is certain that his answer could not be used as evidence against him and further displays the significance of his right to silence. Courts have interpreted Section 313 of the Code of Criminal Procedure, 1973 in line with the legislative intent and have even strengthened the rights of the accused under this provision. They have clarified that the statement under Section 313 of the Code of Criminal Procedure, 1973 is not substantive evidence and is merely an aid for the Court to examine the evidence on record. It can neither be made the sole basis for conviction, nor can it be used to complete the missing links in the prosecution’s evidence. A three Judges’ bench of the Apex Court in Selvi & Ors. v. State of Karnataka (2010 (2) KLT OnLine 1101
(SC) = (2010) 7 SCC 263),went on to hold that not only does an accused person has the right to refuse to answer any question that may lead to incrimination, there is also a rule against adverse inferences being drawn from the fact of his silence. At the trial stage, Section 313(3) of the Code of Criminal Procedure, 1973 places a crucial limitation on the power of the Court

to put questions to the accused so that the latter may explain any circumstances appearing in the evidence against him. It lays down that the accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them. Further, Proviso (b) to Section 315(1) of the Code of Criminal Procedure, 1973 mandates that even though an accused person can be a competent witness for the defence, his failure to give evidence shall not be made the subject of any comment by any of the parties or the Court or give rise to any presumption against himself or any person charged together with him at the trial. It is evident that Section 161(2) of the Code of Criminal Procedure, 1973 enables a person to choose silence in response to questioning by a police officer during the stage of investigation and as per the scheme of Section 313(3) and Proviso (b)
to Section 315(1) of the Code of Criminal Procedure, 1973, adverse inferences cannot be drawn on account of the accused person’s silence during the trial stage. The classic decision in Woolmington v. DPP (1935 AC 462) which held that the ‘right to silence’ is a principle of common law and it means that normally Courts or Tribunals of fact should not be invited or encouraged to conclude, by parties or prosecutors, that a suspect or an accused is guilty merely because he has refused to respond to questions put to him by the police or by the Court was also referred to. In Raj Kumar Singh @ Raju @ Batya v. State of Rajasthan (2013 (2) KLT SN 133 (C.No.169) SC = AIR 2013 SC 3150), it was held that an adverse inference can be taken against the accused only, and only if the incriminating material stood fully established and the accused is not able to furnish any explanation for the same. However, the accused has a right to remain silent as he cannot be forced to become witness against himself. Further, Courts have also read in the ‘rule against adverse inferences’ and stated that no adverse inferences can be drawn from the silence of the accused in the examination under Section 313 of the Code of Criminal Procedure, 1973. This has in fact been considered conjunctively with Article 20(3) of the Constitution of India and is, hence, a facet of the fundamental right against self-incrimination. It is thus evident that if even the answers of accused cannot be used as evidence against him, it is inconceivable that the silence of the accused, when he is constitutionally and statutorily guaranteed that right, can be relied on to concoct a narrative that convicts him. A conjoint reading of Sections 161(2), 313(3) and 315 raise a presumption against guilt and in favour of innocence, grant a right to silence both at the stage of investigation and at the trial and also preclude any party or the Court from commenting upon the silence. The issue that crops up from Prahlad v. State of Rajasthan (supra) is that it sets a precedent for conviction on criminal charges based on adverse inferences drawn from the silence of the accused under Section 313 of the Code of Criminal Procedure, 1973.

f. It has to be adverted to the fact that the question of drawing adverse inferences against the accused from his silence while being questioned under Section 313 of the Code of Criminal Procedure, 1973 was dealt with by the Supreme Court on numerous occasions. True, the Courts have vacillated on this issue and there have been judgments both prohibiting and allowing for the same. Some of the judgments permit such inferencesto

be drawn by the Court. In Ramnaresh & Ors. v. State of Chattisgarh (2012 (2) KLT SN 34(C.No.32) SC = (2012) 4 SCC 257) it was held that the Court would be entitled to draw an inference, including adverse inference, as may be acceptable to it in accordance with law. Referring to the said decision, which was to be pronounced on the same day, the Apex Court in Brajendra Singh v. State of Madhya Pradesh (2012 (2) KLT SN 37 (C.No.34) SC = AIR 2012 SC 1552) held that even though the statement of the accused under Section 313 of the Code of Criminal Procedure, 1973 cannot be solely relied upon to convict him but where such a statement is in line with the case of the prosecution, then the heavy onus of providing adequate proof on the prosecution, is to some extent, reduced. In Munish Mubar v. State of Haryana (AIR 2013 SC 912) it was held that it is obligatory for the accused to furnish an explanation with respect to implicating circumstances associated with him, the failure of which could lead to adverse inferences being drawn from his silence. The decision in Prahlad v. State of Rajasthan (supra) however, impliedly holds that reliance on such an adverse inference can be placed even to the extent of convicting the accused.

g. Obviously, the object of the examination under Section 313 of the Code of Criminal Procedure, 1973 is to benefit the accused by providing him an opportunity to defend himself. He has the right to remain silent and the only way in which the provision can be used against the accused is if he has made a statement supporting the prosecution which the Court may then use as aid while appreciating the evidence. Anyhow, the Apex Court in Prahlad v. State of Rajasthan (supra) has abridged the right to remain silent and reversed the burden of proof apart from overlooking the important fact that the accused is not put on oath when he is subjected to inquiry under Section 313 of the Code of Criminal Procedure, 1973. Under Indian law, the accused has a right to silence and can remain silent through the entire process and furnish no evidence of his own. It is the duty of the prosecution to discharge the burden of proving that the accused is guilty beyond reasonable doubt. The prosecution must ‘stand or fall on its own legs and cannot derive any strength from the weakness of the defence’ as settled in the three Judges’ Bench decision in Sharad Birdhichand Sardar v. State of Maharashtra (1984 KLT SN 59 (C.No.101) SC =
(1984) 4 SCC 116).This is the scheme of Section 101 of the Indian Evidence Act, 1872. Mere silence cannot shift the onus upon the accused even under Section 106 of the Indian Evidence Act, 1872 unless the prosecution has first established a case against him. If not, the benefit of doubt must be given to the accused due to the presumption of innocence. By drawing adverse inference from the silence during the examination under Section 313 of the Code of Criminal Procedure, 1973, it decreases the scope of the right against self-incrimination and in effect, requires the accused to prove his innocence. One cannot lose sight of the fact that how advantageously an accused uses the opportunity afforded to him under Section 313 of the Code of Criminal Procedure, 1973 and what statements he makes to point out his innocence depends on whether he has access to an erudite lawyer. Given the large number of cases in which accused with poor means have to rely on disinterested legal aid lawyers, more often than not, they squander away this right, either remaining silent where they have a cogent alternative explanation for the evidence on record or by making incriminatory statements when they should have exercised this right to silence. It is then incumbent upon the Court to beneficially interpret Section 313 of the Code of Criminal Procedure, 1973 so that the accused is ensured a fair trial instead of using it as a tool to implicate the potentially innocent.

h. Unfortunately, numerous cases which have safeguarded the rights of the accused are rendered by smaller benches and could stand to have been impliedly overruled by Prahlad v. State of Rajasthan (supra). Even Selvi v. State of Karnataka (supra), also by a three Judges’ Bench, does not come to rescue, given the lack of judicial clarity vis-a-viswhich is to be considered as binding, when there are conflicting decisions rendered by co-equal benches.

i. The right to silence is a fundamental human right recognized across the globe. The jurisprudence with regard to drawing adverse inferences from the silence of the accused during questioning under Section 313 of the Code of Criminal Procedure, 1973 seems to be flawed. Firstly, the provision itself, in spirit, was inserted to aid the accused in providing explanation for incriminating circumstances. It only allows the Court to draw inferences from the answers provided by the accused not from his silence. It expressly precludes the administration of oath to the accused so that the accused is not under any fear of punishment while making his statements. As held in Sujit Biswas v. State of Assam
(2013 (2) KLT SN 154 (C.No.194) SC = AIR 2013 SC 3817), it is a settled legal proposition that in a criminal trial, the purpose of examining the accused person under Section 313 of the Code of Criminal Procedure, 1973 is to meet the requirement of the principles of natural justice, i.e., audi alterum partem. This means that the accused may be asked to furnish some explanation as regards the incriminating circumstances associated with him, and the Court must take note of such explanation. In a case of circumstantial evidence, the same is essential to decide whether or not the chain of circumstances is complete. No matter how weak the evidence of the prosecution may be, it is the duty of the Court to examine the accused, and to seek his explanation as regards the incriminating material that has surfaced against him. The said statement cannot be treated as evidence within the meaning of Section 3 of the Indian Evidence Act, 1872 as the accused cannot be cross-examined with reference to such statement. Thus, it would be logically impermissible to draw adverse inference from the silence of the accused under Section 313 of the Code of Criminal Procedure, 1973 and convict him, solely relying on such inference. The practice of drawing an adverse inference from the silence of the accused, in exercise of his said right would amount to testimonial compulsion and contravenes Article 20(3). The legislative intent of the framers of the Code of Criminal Procedure, 1973 in dropping the previous provision allowing adverse inferences to be drawn from the refusal of the accused to answer a question under Section 313 of the Code of Criminal Procedure, 1973
ipso factodemonstrates the same line of thought. Silence can always be consistent with the

innocence. An accused might remain silent because of shock, confusion, embarrassment, a desire to protect another person or to avoid reprisals, or in order to conceal some other improper conduct of some other person or it may be his personal trait to generally be silent or he may be having a low intelligence quotient or there may be a problem of language or literacy or there may be drug dependency. He may not have understood the caution administered by the police, he may not have realized that certain facts known to him would prove his innocence or as already stated, he may have remained silent because of a
bona fideadvice by a lawyer. Thus, it is imperative that the judiciary recognizes the right to silence as an unbridled right which forms an integral part of the right to fair trial under
Article 21 of our Constitution.

j. The ramifications that Prahlad v. State of Rajasthan (supra) could potentially have given its interpretation of Section 313 of the Code of Criminal Procedure, 1973 are enormously grave. Not only has the said decision shifted the burden of proof from the prosecution to the accused and violated the principle of presumption of innocence, but it has gone against the text of the provision concerned and abridged the right of an accused against self-incrimination guaranteed under Article 20(3) of the Constitution as also his right to fair trial embodied under Article 21. The million dollar question which vexes one’s mind is whether the Apex Court has really rewritten Section 313 (3) of the Code of Criminal Procedure, 1973 resurrecting the omitted provision of drawing adverse inference which existed in its corresponding old Section 342(2) of the Code of Criminal Procedure, 1898.

Advocates-on-Record in the High Courts --
Is AoR System Desirable in the High Court?

(By O.V. Radhakrishnan, Senior Advocate, High Court of Kerala)

 In this Article the attempt is to demystify the intricate balance between the power of the Supreme Court and the High Courts in the institution of Advocates-on-Record system and offers insight into the working of the system in the Supreme Court in the wake of the proposal to introduce the system in the High Court of Kerala.  The Advocates Act, 1961 is an Act to amend and consolidate the law relating to Legal Practioners and to provide for the constitution of Bar Councils and an All-India Bar as described in the Preamble to the Act. The Advocates Act itself was introduced to implement the recommendations of the All India Bar Committee made in 1953. It aimed at establishment of an All India Bar Council, a common roll for the advocates and integration of the Bar into a single class of practitioners known as ‘advocates’.  It was also to create autonomous Bar Councils, one for the whole of India and one for each State. The professional function of advocate is, essentially, one of supreme, even sublime and the right to practice the profession of law is not only a statutory right but also is a fundamental right guaranteed under Article 19(1)(g) of the Constitution of India subject to reasonable restrictions in the interest of the general public imposed by the State by any law.¹

Advocates are the only recognized class of persons entitled to practise law as declared in Section 29 of the Advocates Act. A conjoint reading of Sections 24, 29 and 33 of the Advocates Act make it clear that once a person is found qualified to be admitted as an Advocate on the State Roll having satisfied the statutory conditions of eligibility laid down in sub-section (1) of Section 24, he becomes entitled to get enrolled as Advocate. Every enrolled advocate shall be entitled as of right to practise throughout the territories to which the Act extends under Section 30 of the Act. No overriding power is given either in the Bar Councils Act or in the Advocates Act to limit or in any manner affect the entitlement of the right to practise the profession of law. Bringing out a dual agency by setting up advocates-on-record system is outside the substantive scope of the Advocates Act, 1961 and beyond the powers of the High Court under the Advocates Act and is ultra vires. On creation of the Advocate-on-Record system the Advocate-on-Record alone would be entitled to file appearance or act for a party in the Court. Resultantly, the Advocates who are otherwise entitled to practise the profession of law would be replaced by advocates-on-record not contemplated by or permitted under the Advocates Act. Necessarily, introducing Advocate-on-Record system in the High Court would be violative of the entitlement of advocate as of right to practice under Section 30 of the Advocates Act and would tantamount to depriving the fundamental right to practise the profession of law guaranteed under Article 19(1)(g) of the Constitution.

The Advocates Act, 1961 entitles an advocate as ofright to practise which is the statutory prerogative subject to no restriction or interference. Section 30 of the Act entitles every advocate whose name is entered in the State roll as ofright to practise in all Courts.  Section 30 of the said Act was brought into force with effect from 15th day of June, 2011 as per Notification S.O.1349 (E) dated 9th June, 2011 published in the Gazette of India Extraordinary.  Section 30 of the Advocates Act is quoted below:

“30. Right of advocates to practise.-- Subject to provisions of this Act, every advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends,-

        (i)                                                                     in all Courts including the Supreme Court;

        (ii)                                                                    before any tribunal or person legally authorised to take evidence; and

         (iii)                                                                  before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise”.

The right conferred upon every advocate whose name is entered in the State Roll as ofright under Section 30 of the Advocates Act, 1961 is a complete right to appear and plead as well as to act in the High Court. His right once granted cannot be deprived of quahis acting in the Court while remaining enrolled as an advocate on the State Roll.  Thus the entitlement as ofright to practise the profession of law jealously confined and unreservedly conferred upon the advocates under the Act cannot be rendered unavailing by the institution of Advocates-on-Record system in the High Courts.

In Aswini Kumar v. Arabinda Bose,²the Supreme Court held that an advocate of the Supreme Court becomes entitled as of right to appear and plead as well as to act in all the High Courts including the High Court in which he is already enrolled, without any differentiation being made for this purpose between the various jurisdictions exercised by those Courts. The word ‘practise’ as applied to an Advocate in India includes both the functions of acting and pleading, and there is nothing in the Supreme Court Advocates (Practise in High Courts) Act, 1951 to warrant the cutting down of that statutory right to pleading only. The Supreme Court further declared that the legislature used the word ‘practise’ both in the Bar Councils Act and in the Supreme Court Advocates (Practise in High Courts) Act in its full sense of acting and pleading. In the absence of any overriding power under the Act of 1951, any restrictive rule cutting down the statutory right would be repugnant to Section 2 of the said Act and therefore, void and inoperative.

Advocate-on-Record system is alien to the Advocates Act, 1961. The Advocate-on-Record system was devised by the Supreme Court in 1962 and has been there ever since. The Supreme Court Rules, 1950 were amended in exercise of the power under Article 145(1) of the Constitution by inserting Rules 16 and 17 under Order IV introducing Advocate-on-Record system which were challenged before the Supreme Court in  In Re Lilly Isabel Thomas³. The impugned rules were found to be valid and within the rule making power of the Supreme Court under Article 145(1) of the Constitution read with Section 52 and Section 58(3) of the Advocates Act.

The Rule made by the Supreme Court under Article 145 of the Constitution of India is subject to the provisions of any law made by the Parliament. Legislative Entry to make law in respect of persons entitled to practise before the Supreme Court is Entry 77, List 1 of the Seventh Schedule of the Constitution. No law was made by the Parliament under Entry 77 List 1 of the Seventh Schedule of the Constitution of India and the Rules 16
and 17 of the Supreme Court Rules were found to be not in contravention of any provisions of law made by Parliament.

The Supreme Court Rules, 1950 were repealed by the Supreme Court Rules, 1966
which stood repealed by The Supreme Court Rules, 2013. The Supreme Court Rules, 2013 were made by the Supreme Court in exercise of the powers conferred by Article 145 of the Constitution and all other powers enabling it in that behalf with the approval of the President.

The salient features of AoR system are discernible in the Supreme Court Rules, 2013. According to Rule 5 no advocate shall be qualified to be registered as an Advocate-on-Record unless his name is or has been borne on the Roll of any State Bar Council for not less than four years on the date of commencement of his training and has undergone training for one year with an Advocate-on-Record by the court and thereafter, passes such tests as may be held by Court for advocates who apply to be registered as Advocate-on-Record. Rule 7 provides that an Advocate-on-Record shall, on his filing a memorandum of appearance on behalf of a party accompanied by a vakalatnama duly executed by the party be entitled to act as well as to plead for the party in the matter and to conduct and prosecute before the Court in all proceedings, that may be taken in respect of the said matter or any application connected with the same or any decree or order passed therein including proceedings on taxation and applications for review. Rule 7(c) provides that no advocate other than an Advocate-on-Record shall be entitled to file an appearance or act for a party in the Court. What follows is that on setting up the AoR system ‘advocate’ falling within the definition of ‘advocate’ in the Advocates Act and in the Bar Councils Act shall stand deprived of their right to appear for a party, plead and address the Courts in a matter.  Once a person is found qualified to be admitted as an advocate on the State Roll having satisfied the statutory conditions of eligibility laid down in sub-section (1) of Section 24, he automatically becomes entitled to be enrolled as advocate and on enrolment the right to practise with all its vigour and force is available to those advocates whose names are entered in the State Roll as per Section 17 of the Act.

The Rules creating AoR system were framed by the Supreme Court under Article 145(1) of the Constitution have overriding operation in view of saving clause under
Section 52 and Section 58(3) of the Advocates Act.  Under Section 52 of the Advocates Act the Supreme Court has been expressly authorised to make rules in exercise of the power under Article 145(1) of the Constitution untrammelled by the provisions in theAdvocates Act. Section 58(3) of the Advocates Act specifically provides that every person who, immediately before the first day of December 1961, was an Advocate on the roll of any High Court under the Indian Bar Councils Act, 1926 or who has been enrolled as an Advocate under the Act until Chapter IV comes into force, be entitled as of right to practise in the Supreme Court subject to the rule made by the Supreme Court in that behalf. In view of the specific provisions contained in the Constitution and Sections 52 and 58(3) of the Advocates Act, the entitlement as of right of an advocate to practise in the Supreme Court is subject to the Rule made by the Supreme Court in that behalf conveying the idea that the rules made by the Supreme Court shall prevail upon the provisions in the Advocates Act. 

 The power of the High Court to make rules is confined to lay down the conditions subject to which an Advocate shall be permitted to practise in the High Court and the Courts subordinate thereto under Section 34 of the Advocates Act. The Rules made by the High Court under the above provision can have only regulatory character and cannot be prohibitive or infringe the full-fledged right to practise the profession of law.

The Rules are delegated legislation and the delegated legislation cannot in any way  change the provisions of enactment itself and must only be resorted to for the carrying out the purposes of the legislation itself. In Babaji Kondaji Garad etc. v. The Nasik Merchants Co-operative Bank Ltd., Nazik and others etc.⁴  the Supreme Court held that if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over subordinate legislation and the bye-law, if not in conformity with the Statute in order to give effect to the statutory provision, the Rule or bye-law has to be ignored. That being the settled legal position, the High Court is not competent to bring out the Advocate-on-Record system which would be repugnant to the provisions of the Act and ultra viresthe power vested with it under Section 34(1) of the Advocates Act.

An advocate whose name is borne on the State Roll has a full-fledged right to practise throughout the territory of India.  The right of Advocate to practise as of right is made subject to the Advocates Act and that general right to practise cannot in any manner be fettered or whittled down and the rules can be made only for regulating proceedings inside the Court which is distinct from the right to practise the profession of law. In Pravin C. Shah  v. K.A.Mohammed Ali ⁵ the Supreme Court approvingly quoted the following observations made in the judgment by a Division Bench of the Allahabad High Court in Prayag Das v. Civil Judge, Bulandshahr and Others ⁶:

“The High Court has a power to regulate the appearance of advocate in courts.  The right to practise and the right to appear in courts are not synonymous.  An advocate may carry on chamber practice or even practise in courts in various other ways, eg., drafting and filing of pleadings and Vakalatnamafor performing those acts.  For the purpose of regulating his appearance in courts, the High Court should be the appropriate authority to make rules and on a proper construction of S.34(1) of the Advocates Act it must be inferred that the High Court has the power to make rules for regulating the appearance of advocates and proceedings inside the courts.  Obviously, the High Court is the only appropriate authority to be entrusted with this responsibility. However, so far as the basic qualifications of an Advocate entitling him to practise without physically appearing in Court, or disentitling him from doing so are concerned, the determination of such conditions must remain within the exclusive province of the Bar Council. The same division of functions is borne out by the difference of language of the two provisions. Whereas clause (ab) of Section 49 refers to the conditions subject to which an Advocate shall have the right to practice, Section 34(1) deals with the conditions subject to which an Advocate shall be “permitted to practise” in the context can have only one meaning i.e., the right of physical appearance in Court. The word “permitted’ refers to a particular occasion when an Advocate wants to appear in a Court and not to his general right to practise which is solely determined by the Bar Council. ...................   The words “laying down the conditions subject to which an advocate shall be permitted to practise” must be given a restricted meaning of permitting physical appearance of the Advocate and not his general right to practise as an Advocate.”

The Supreme Court endorsed that the legal position has been correctly delineated in the above statement of the Allahabad High Court which was made in the context of questioning the powers of the High Court by an advocate in making dress regulation for the advocates while appearing in Courts.  The Supreme Court drew a distinction between the power to formulate rules for regulating proceedings inside the Court and to regulate the general right to practise treating as different and distinct.

In Abhay Prakash Sahay Lalan v. High Court of Judicature at Patna⁷ a Division Bench reiterated that the Rules framed under Section 34(1) of the Advocates Act are regulatory in character, and are not prohibitory.

The High Court while making Rules under Section 34(1) of the Advocates Act cannot contravene substantive provisions in the Act and they may relate merely to the rules of practice or conditions of the right to practise. Section 34(1) of the Advocates Act does not empower the High Court to cut down the substantive right of an Advocate to practise, that is to say, the right to act and plead. The rules can provide fixing professional standards, ethics and duties of Advocates.  The right to appear and conduct cases in the Court is a matter on which the Court must and does have major supervisory and controlling power. The High Court has power to formulate rules for regulating proceedings inside the Court. Such power should not be confused with the right to practise law. The High Court can regulate the appearance of the Advocates in Courts.⁸

Section 16(1) of the Advocates Act specifically provides that there shall be two classes of advocates, namely, Senior Advocates and other Advocates. Section 17(1) provides that every State Bar Council shall prepare and maintain a Roll of Advocates in which shall be entered the names and addresses of all persons entered as Advocates on the Roll of any High Court under the Indian Bar Councils Act and all other persons who are admitted to be Advocates on the Roll of the State Bar Council under the Act on or after the appointed day. Sub-section (2) thereof provides that each such Roll of Advocates shall consist of two parts, the first part containing the names of Senior Advocates and the second part, the names of other Advocates. Therefore, there are only two classes of Advocates under the Advocates Act, enacted by the Parliament and the classification of Advocates statutorily made cannot be multiplied by the High Court in exercise of the rule making power by introducing yet another class called ‘Advocate-on-Record’.  It is a negation of equality falling within the mischief of Article 14 of the Constitution of India.

In the Supreme Court Rules an ‘advocate’ and ‘advocate-on-record’ are differently defined and are treated as different classes of advocates. ‘Advocate’ is defined to mean a person whose name is entered on the Roll of Advocates prepared and maintained by a State Bar Council under the Advocates Act whereas ‘Advocate-on-Record’ is defined to mean an advocate who is entitled under the Rules to act as well as to plead for a party in the Court. By the above definition of Advocate-on-Record, the entitlement to act as well as to plead for a party in the court is exclusively conferred on the Advocate-on-Record and an ‘advocate’ as defined in the Act is totally debarred from acting as well as pleading for a party in the Court. It also contains a provision that no advocate other than the Advocate-on-Record for a party shall appear, plead and address the court in a matter unless he is instructed by the Advocate-on-Record or permitted by the Court. Rule 7(a)(i) of the Rules provides that an Advocate-on-Record shall on his filing a memorandum of appearance on behalf of a party accompanied by a Vakalatnama duly executed by a party, be entitled to act as well as to plead for the party in the matter and to conduct and prosecute before the Court all proceedings that may be taken in respect of the said matter or any application connected with the same or any decree or order passed therein including proceedings in taxation and application for review and Rule 7(a)(c) directs that no advocate other than an Advocate-on-Record shall be entitled to file an appearance or act for a party in the Court. The Supreme Court Rules as amended in 1962 having been upheld In Re Lilly Isabel Thomas’ case, the legality of classification of advocates made in the Supreme Court Rules, 1962 which is not materially different in the new Rules, 2013 is not a surviving issue.

There is yet another aspect to be noticed. Advocates from various State Roll in the country may come and appear before the Supreme Court and their identity cannot be easily verified by the Supreme Court Registry. An advocate who is not on the Roll of the concerned State Bar Council and who is not ordinarily practicing in such Court, a regulatory measure that such advocate can file an appointment alongwith an advocate who is on the Roll of such Bar Council of the State and who is ordinarily practicing in such Court is necessitous. The object of the above regulatory condition is to ensure that the Advocates who can be easily located and accountable to the Courts are allowed to practise before the Court. Rule 3 of the Rules framed by the High Court of Kerala under Section 34(1) of the Advocates Act, 1961 Regarding Conditions of Practice of Advocates provides that an advocate who is not on the roll of the Bar Council of the State in which the Court is situate, shall not act in such Court, unless he files an appointment alongwith an advocate who is on the Roll of such State Bar Council and who is ordinarily practicing in such Court. Such a condition is intended for easy identification of the person who appears before the Court when he is an advocate enrolled in another Bar Council or is not on the Rolls of advocates of the High Court and is to ensure his presence whenever the cases are listed and to minimize dismissal of cases for default and waistage of judicial time. The objective is achieved when he is permitted to appear alongwith a local advocate of the High Court. Such regulation cannot be confused with the right to practise the profession of law.  Infringement of the right to practise the profession of law would arise only if prohibition is imposed against filing appearance and acting for a party and vesting such power solely on the advocate-on-record.

On the institution of the Advocate-on-Record system no one can appear, plead and address the Court except by an authority of an AoR and instructed by an AoR. An AoR alone is entitled to act as well as to plead for the party in the matter and to conduct and prosecute before the Court. Thereby, the advocate on the State Roll is divested of the authority and power to act and plead for a party in a matter and to conduct and prosecute before the Court in all proceedings that may be taken in respect of the said matter. Resultantly, the statutory right of advocate to practiseas of rightconferred under Section 30 of the Advocates Act would be fettered or impaired under the guise of framing rules rendering the entitlement as of rightto practise the profession of law nugatory and illusory.

The institution of AoR system transgressing the Advocates Act is totally impermissible in the purported exercise of the rule making power under Section 34(1) of the Advocates Act. If any ban, partial or otherwise, is imposed on the right to practise the profession of law of the ‘advocates’ as defined in Section 2(a) of the Advocates Act from exercising the right to practise namely, to ‘act and plead’ in the High Court by bringing out the devise of AoR system, it is acting beyond its powers and is ultra vires.It is violative of the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India.

It may not go unnoticed that in R.K.Anand v. Delhi High Court ⁹, the Supreme Court in a matter arising out of conviction under the Contempt of Courts Act on a complaint of sting recordings noticing that all the High Courts have not framed Rules under Section 34 of the Advocates Act and while directing to frame rules without further delay, an observation has been made that the High Courts may also consider framing Rules for having Advocates-on-Record on the pattern of the Supreme Court of India which is one  made without argument, without reference to the relevant provisions of the Act and totally outside the issues in

question in the case. The observation was unnecessary for the decision pronounced and not on an issue pleaded or in question before the Supreme Court or decided by it. It is a casual expression or passing expression which does not carry any weight and cannot be treated an ex-cathedra statement having weight of authority. 

Before concluding, it is only appropriate to mention here that though the Supreme Court framed rules under which the institution of AoR is created in order to facilitate the working of the Court, instances converting the noble profession into a profession of cheating presenting a very sorry state of affairs are galore. The Supreme Court had occasion to deplore the conduct of AoR adopting the unbecoming and unethical practice of lending of signatures for a petty amount without any sense of responsibility and rendering no assistance to the Court. In Tahil Ram Issardas Sadarangani v. Ramchand Issardas Sadarangani¹⁰ the Supreme Court approvingly quoted the passage from the Order of the learned Judge of the Bombay High Court containing the sentiments expressed therein:

“It appears  that there are certain firms of attorneys who enter into arrangements with advocates under which they file appearances for persons who are the direct clients of these advocates. In such cases, the entire carriage of the proceedings is left to the advocate, and he is briefed at the hearing by the attorney merely as a matter of form, even the fees being recovered directly by the advocate from his client. From the point of view of professional ethics, it is, in my opinion, not proper for an attorney to lend his name in that manner and such practices amount to an abuse of the dual system prevailing on the original side of this Court.”

The Supreme Court further observed “The legal profession must give an introspection to itself. The general impression which the profession gives today is that the element of service is disappearing and the profession is being commercialised. It is for the members of the Bar to act and take positive steps to remove this impression before it is too late.” In Vijay Dhanjai Chaudhary v. Suhas Jayant Natawadkar¹¹ the Supreme Court noticed the unfortunate prevalence of the practice of filing Special Leave Petitions by Advocate-on-Record acting as mere name-lenders, without having or taking any responsibility for the case and as a result of prevalence of such a practice, in such cases, the Advocate-on-Record do not appear when the matters are listed either before the Registrars or before the Chamber Judge (CJ) or the Court nor they do take any interest or responsibility for processing and conducting the case. They also play no role in preparation of Special Leave Petitions, nor ensure that the requirements of the rules are fulfilled and defects are cured. If the role of an Advocate-on-Record is merely to lend his name for filing cases without being responsible for the conduct of the case, the very purpose of having the system of Advocates-on-Record would get defeated. Accordingly, the Supreme Court issued noticeto the Advocate-on-Record Association and the Supreme Court Bar Association to assist the Court to find appropriate solution and provide necessary checks and balances. In Rameshwar Prasad Goyal, In Re¹² the Supreme Court again strongly deprecated the practice of lending signatures by the AoR for consideration. The Supreme Court noticed: “In a system, as revealed in the instant case, a half-baked lawyer accepts the brief from a client coming from a far distance prepares the petition and ask an AoR, having no liability towards the case, to lend his signatures for a petty amount. The AoR happily accepts this unholy advance and obliges the lawyer who has approached him without any further responsibility. The AoR does not know the client, has no attachment to the case and no emotional sentiments towards the poor cheated clients. Such an attitude tantamounts to cruelty in the most crude form towards the innocent litigant. In our humble opinion, the conduct of such AoR is certainly unbecoming of an AoR. Though the observations by this Court in Tahilram Issardas Sadaranganiwere made two decades ago, the same are apposite even today. The Bar failed to have an introspection and improve the situation.” The Supreme Court further observed that “ The facts of this case present a very sorry state of affair. A noble profession has been allowed to be converted by this AoR into a profession of cheating. An AoR, whom the litigant has never briefed or engaged, has lent his signature for a petty amount with a clear understanding that he would not take any responsibility for any act in any of the proceedings in the Registry or the Court in the matter. The advocate who has been obliged by such an AoR must be going inside the Registry in an unauthorised manner and must be appearing in the Court directly or engaging a Senior Advocate without any knowledge/authorisation of the AoR. It is beyond our imagination what could be more devastating and degrading for the institution of AoR’s. Even a few of them indulging in such an obnoxious practice spoils the working of this Court without realising that the Bench and the Bar, both have to give strict adherence to moral code.” The Supreme Court proceeded to observe: “Multi-tier operation of one lawyer hauling a client and then acting as a facilitator for some other lawyer to draw proceedings or engage another lawyer for arguing a case is definitely an unchartered and unofficial system which cannot be accepted as in essense, it tantamounts to a trap for litigants which is neither ethically nor professionally a sound practice. Such conduct is ridiculously low from what is expected of a lawyer. This kind of conduct directly affects the functioning of the Court and causes severe damage that at times becomes irreparable and incompensable. It is ironic that an AoR who has cleared an examination to get himself authorised lawfully for assisting the court becomes conspicuous by his absence though his presence is maintained on record. The defective psychology of not appearing in the court is contrary to the first principle of advocacy.”

     The above quote at length has burning relevance now.

     Nota bene, if Rules are framed by the High Court on similar pattern of the Supreme Court Rules to bring in AoR system in the High Court, it would no way facilitate the working of the Court any better but would result in doing positive disservice to the litigants. Theintroduction of AoR system in the High Court cannot by any stretch of logic said to be for the furtherance of the administration of justice and not at all help in regulating the orderly functioning of the Court. The role of middleman would place a big financial burden on the poor litigant and they would be on sufferance. Consequently, the rights of litigants who are before the Court seeking justice will be badly affected and people will lose confidence in the profession on account of deviant conduct of AoR by making his/her role as mere name lender. If anything has the effect of impairing or hampering the quality of the profession of law, it will surely affect the administration of justice.

This prefatory caveat is intended to serve a perspective to a critique of the expediency in adopting AoR system in the High Court.

A study of the AoR work in practice in the Supreme Court reveals the skullduggery of the Advocates-on-Record and the deleteriousness of the AoR system in relation to the administration of Justice. In the circumstances, to cut out the middleman and do away with the dual system in the Supreme Court is the only way to solve the serious problem created by deviant conduct of AoR in years past in the Supreme Court. If not, the right of the litigating public will remain truncated and trampled upon by the Advocates-on-Record leading to a travesty of justice.

Let me conclude with a sober quote:

“The wise know that foolish legislation is a rope of sand, which perishes in the twisting.”

                                                                                                   -- Ralph Waldo Emerson

Foot Note

1.  N.K.Bajpai v. Union of India (2012 (2) KLT SN 13 (C.No.12) SC =  (2012) 4 SCC 653 para 21).

2.Aswini Kumar v. Arabinda Bose (1953 KLT OnLine 917 (SC) = AIR 1952 SC 369).

3.   In Re Lilly Isabel Thomas (AIR 1964 SC 855).

4.   Babaji Kondaji Garad etc v. The Nasik Merchants Co-operative Bank Ltd., Nasik and Ors.etc. (1984 KLT SN 7 (C.No.14) SC = 1983 (10) TMI 270 (SC). 

5.   Pravin C. Shah v. K.A.Mohammed Ali(2001 (3) KLT 820 (SC)).

6.   Prayag Das v. Civil Judge, Bulandshahr & Ors. (AIR 1974 All.133).

7.   Abhay Prakash Sahay Lalan v. High Court of Judicature at Patna (AIR 1998 Patna 75).

8.   Jamshad Answari v. High Court of Judicature at Allahabad (2016 (4) KLT 1044 (SC) =
(2016) 10 SCC 554).

9. R.K. Anand v. Delhi High Court (2009) 8 SCC 106 at para 243.

10. Tahil Ram Issardas Sadarangani v. Ramchand Issardas Sadarangani  (1993 Supp.(3) SCC 256).

11.Vijay Dhanjai Chaudhary v. Suhas Jayant Natawadkar(2010) 1 SCC 166 = 2010 (1) KLT Suppl.189 (SC).

12.  Rameshwar Prasad Goyal, In Re (2014 (1) KLT Suppl.48 (SC) = (2014) 1 SCC 572.