Mental Health – A Perspective

(By V.Ramkumar Nambiar, Advocate, High Court of Kerala)

The Mental Health Care Act 2017 was enacted to provide for mental health care and services for persons with mental illness and to protect, promote and fulfill the right of such persons during delivery of mental health care and services and for matters connected therewith or incidental thereto. The United Nations Convention on the Rights of Persons with Disability, which was ratified by the Government of India in October, 2007, made it obligatory on the Government to align the policy and laws of the country with the Convention. Though there was already the Mental Health Act 1987, it was felt that there was a need to amend the said Act laying emphasis on the rights of persons with mental illness which was specifically absent in the earlier enactment. Further the question of amendments were also being considered as regards the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995. Thereafter the Rights of Persons with Disabilities Act, 2016 was enacted. As the Mental Health Act 1987 could not protect the rights of persons with mental illness and was insufficient to promote their access to mental health care in the country, the Mental Health Care Act 2017 was enacted and it was brought into force on 7.7.2018 notified in the official gazette on 29.5.2018. The new Mental Health Care Act 2017 lays emphasis on the rights of persons with mental illness and the choice of such persons to appoint nominated representatives and to get themselves admitted in any mental health care establishments.

2. Section 2(s) of the Mental Health Care Act 2017 defines mental illness as follows: “Mental Illness – means a substantial disorder of thinking, mood perception, orientation or memory that grossly impairs judgment, behaviour, capacity to recognize reality or ability to meet the ordinary demands of life, mental conditions associated with the abuse of alcohol and drugs, but does not include mental retardation which is a condition of arrested or incomplete development of mind of a person specially characterized by sub-normality of intelligence”. 

3. Section 2(p) defines Mental Health Establishment as follows: “Mental Health Establishment” – means any health establishment including Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy Establishment, by whatever name called, either wholly or partly , meant for the care of persons with mental illness,  established, owned, controlled or maintained by the appropriate Government, local authority, trust whether private or public, corporation, co-operative societies, organization or any other entity or person, where persons with mental illness are admitted and reside at, or kept in, for care, treatment, convalescence and rehabilitation, either temporarily or otherwise ; and includes any general hospital or general nursing home established or maintained by the appropriate Government , local authority, trust, whether private or public, corporation, co-operative society, organization, or any other entity or person ; but does not include a family residential place where a person with mental illness reside with his relatives or friends. 

4. The Mental Health Care Act 2017 is essentially enacted taking care to protect and  safeguard the rights of the mentally ill persons. Section 65 under Chapter 10 of the Mental Health Care Act 2017 stipulates that no person or organization shall establish or run a mental health establishment unless it has been registered with the authority under the provisions of the Mental Health Care Act 2017. The word “Authority” has been explained to mean the Central Authority, if the mental health establishment is under the control of the Central Government and the State Authority in respect of mental health establishment of the State. Section 65(2)  stipulates that every person or organization who proposes to establish or run a mental health establishment shall register the said establishment with the authority under the provisions of the Act.

5. It is to be noted that Section 65(2) stipulates mandatory registration of mental health establishments. 

6. The next aspect is regarding admission of a person in the mental health establishment. The Mental Health Care Act 2017 postulates different kinds of admissions. Section 85 of the Act deals with the admission of person with mental illness as an independent patient in a mental health establishment. This postulates the ability of a person with mental illness having capacity to take mental health care and treatment decisions. It is relevant to note that Section 86(b) states that even an independent patient shall not be given treatment without his informed consent. Section 89 stipulates admissions and treatment of persons with mental illness with high support needs upon application by nominated representatives of the persons up to 30 days, Section 90 stipulates treatment beyond 30 days. Section 100 prescribes the duties of police officers in respect of mentally ill persons. This section clothes a police officer to take into protection a person whom he has reason to believe is suffering from mental illness or is being illtreated or neglected by persons who are duty bound to take care of them and take such person to a Mental Health Establishment. The police officer may also file a report  under Section 101 about the mentally ill person before the Jurisdictional Magistrate to proceed in accordance with Section 102. Section 101 stipulates about the report to the Magistrate of a person with mental illness in private residence who is ill treated  or neglected. Section 101(2) stipulates that  “Any person who has reason to believe that a person having mental illness and is being ill treated or neglected by any person having responsibility or care of such person shall report the fact to the police officer  in charge of the police station within whose jurisdiction the person with mental illness resides”. This proviso deals with rights of “any person” who has reason to believe that a person having mental illness and is being ill treated or neglected by any person having responsibility or care of said person, he  shall report the fact to the police officer  in charge of the police station within whose jurisdiction, the person with mental illness resides. This indicates that as far as the rights of a person who intends to help or take care of a mentally ill person is concerned, he can only report about the same before a Police Officer or the Jurisdictional Magistrate under Section 101(3). Section 101(3) stipulates that if the Magistrate has a reasonto believe based on the report of a police officer or otherwise, that any person with mental illness within the local limits of his jurisdiction is being ill treated  or neglected, the Magistrate may cause the person with mental illness to be produced before him and pass an order  in accordance with the provisions of Section 102 of this Act.

7. Section 102 stipulates the procedure for a Magistrate when any person with mental illness is brought before him and the procedure to convey or admit such a person in such mental health establishment. The above provisions have been enacted for the main purpose of ascertaining that there is an independent enquiry about the condition of the person and to secure his rights guaranteed to him under the Constitution of India.

8. It is therefore clear that the admission of a mentally ill person at a registered establishment can either be by independent admission or through his nominated represen-tatives or by a police officer or by orders from the Magistrate. Any other form of admission by private parties which was prevalent in the repealed Mental Health Act 1987 cannot be legally sustainable, after the coming into force of Mental Health Care Act 2017. Our High Court in the decision reported in 2020(1) KLT155 inPrasad M.N & Anr. v. State of Kerala & Ors. had held that a reading of sub-section (3) of Section 101 would crucially mandate that if the Magistrate has reason to believe, based on the report of a police officer or otherwise that any person with mental  illness within the local limits of its jurisdiction is being ill-treated or neglected, then the Magistrate may cause the person with mental illness to be produced before him and pass an order in accordance with the provisions of Section 102. Therefore, one of the prime requisites for fulfilling the jurisdictional facts for invocation of the provisions contained in Section 101(3) of the Mental Health Care Act 2017 is that the Magistrate should have reason to believe based either on the report of a police officer or otherwise that a person with mental illness within the local limits of his jurisdiction is being ill-treated or neglected etc., then only the Magistrate can assume jurisdiction. It is only after crossing the threshold situation envisaged in Section 101 of the Mental Health Care Act 2017 that the learned Magistrate will have to deal with the aspect dealt with in Section 102 of the Act. A reading of Section 102 would make it clear that the Magistrate will get jurisdiction to order for conveying or admitting the person to the Mental Health establishment only if the Magistrate should have reason to believe that the person concerned is either suffering from mental illness or that in his considered opinion the person concerned may have mental illness etc. Therefore the crucial element to be satisfied before issuing an order in terms of Section 102(1) of the Mental Health Care Act 2017 is that the Magistrate should have ‘reason to believe’ on the basis of objective materials and considerations that the person concerned is either having mental illness or may have mental illness before invoking the power under Section 102(1) of the Act so as to order that the person concerned should be conveyed to a mental health institution as envisaged therein.  Branding a person as a mentally ill person and passing an order under Section 102(1) of the Mental Health Care Act 2017 directing that he should be sent to the mental health establishment and assessment and treatment etc., involves extremely grave, adverse consequences on the affected person concerned and if it is so done without any objective material and relevant consideration, then it would be not only grossly illegal and irrational, but would also amount to the invasion of the constitutionally guaranteed right to dignified life and a right for privacy of a person and would thus be not only in violation of the provisions contained in the Mental Health Care Act 2017 but also in grave derogation of the right to dignified life guaranteed under Article 21 of the Constitution of India. This Hon’ble Court, after relying on the decision reported in 2018(3) KLT 934 (SC) (Dr.Sr.Tessy Jose v. State of Kerala),held that ‘knowledge’will stand on a higher level of the state of mind in comparison to ‘reason to believe’ . Whereas, ‘reason to believe’ as understood in Section 26 of the I.P.C. is another fact of the state of mind and is not the same thing as suspicion of doubt. So in substance “reason to believe” means that a person must have reason to believe in the circumstances are such that a reasonable person would by probable reasoning conclude or infer regarding the nature of the thing concerned and the circumstances are such as to create a cause to believe that by a chain of probable reasoning leading to the conclusion or inference about the nature of the thing. In other words, the learned Magistrate should have reason to believe on the basis of objective materials and consideration that the person concerned is either having mental illness or may have mental illness before invoking the power under Section 101(1) of the Act so as to order that the person concerned should be conveyed to a mental health institution as envisaged therein. This emphasis was made taking into consideration that the Mental Health Care Act 2017 lays emphasis on the rights of the mentally ill person and cannot be used as a tool to convey persons to a mental health institution for the mere asking . The rights guaranteed under Article 19 and 21 of the Constitution of India ought to be protected and it is only after being satisfied with the materials on record that a person can be ordered to be conveyed to a mental health institution or establishment. So long as the prime jurisdictional facts required for the invocation of proceedings under Section 101 and consequently that of Section 102 are conspicuously absent, the powers under the aforementioned Sections cannot and ought not to be exercised. The invocation of the Writ Jurisdiction under Article 226 of the Constitution of India for conveying any person with mental illness to a mental health institution in the absence of exercise of jurisdiction under Section 100 to 102 or ill use of the jurisdiction under the aforesaid provisions, will therefore have to be exercised with extreme care and caution taking note of the fact the possible violation of the rights of the alleged mentally ill person guaranteed under Article 21 of the Constitution of India.

9. Our High Court had earlier during the pendency of the Mental Health Act 1987 held in Joseph v. State of Keralareported in 2013(3) KLT 707 that “While admission on the basis of reception orders in terms of Part III would necessarily fall within the continued gaze of the judiciary in terms of the provisions in that Part, it is also necessary that no mental health centre, that is to say, a psychiatric hospital or a psychiatric nursing home, either in Government sector or otherwise, admits any person in violation of the statutory requirements as contained in Part I or Part II of Chapter IV of the Act, as the case may be. All cases of admission on voluntary basis shall be strictly in conformity with the prescriptions in Ss.15 & 16 and no admission shall be made without following the due procedure in S.17 of the Act. No admission under special circumstances which falls under Part II of Chapter IV, shall be made in violation of the terms of S.19. This means that a mentally ill person who does not, or is unable to  express his willingness for admission as a voluntary patient, may be admitted and kept as an inpatient in a psychiatric hospital or a psychiatric nursing home only on an application made in that behalf by a relative or a friend of the mentally ill person if the medical officer in charge is satisfied that in the interest of the mentally ill person, it is necessary so to do. Such an application in terms of sub-section (1) of S.19 has to be in the prescribed form and be accompanied by two medical certificates, from two medical practitioners, of whom one shall be a medical practitioner in the service of Government, to the effect that the condition of such mentally ill person is such that he should be kept under observation and treatment as an inpatient in a psychiatric hospital or in a psychiatric nursing home. However medical officer in charge of a psychiatric hospital or a psychiatric nursing home concerned may, if satisfied that it is proper so to do, cause a mentally ill person to be examined by two medical practitioners working in the hospital or in the psychiatric nursing home instead of requiring such certificates. The aforenoted provisions are made in Chapter IV of the Act to ensure, among other things, that the treatment, care and management of mentally ill persons are appropriately carried out in consonance with the fundamental right to life guaranteed under Part III of the Constitution of India and the concept of “human rights” in the realm of the Human Rights Act 1993 and the obligations of India in the international regime, in connection with human right issues. Similarly, such management should be in consonance with the assured concept of dignity which is a seminal principle and constitutional value declared through the Preamble to the Constitution of India ”.

10. It is also apposite to note that the Hon’ble Supreme Court of India in Shafin Jahan v. Ashokan (2018 (2) KLT 571) has held that the Constitutional Courts may also act as Parens Patriaeso as to meet the ends of justice. But, the said exercise of power is not without limitation. The Courts cannot in every and any case invoke the Parens Patriaedoctrine. The said doctrine has to be invoked only in exceptional cases where the parties before it are either mentally incompetent or have  not come of age and it is proved  to the satisfaction of the Court that the said parties have no parent/legal guardian or have an abusive or negligent parent/legal guardian. The Hon’ble Apex Court has further held that it is obligatory to state here that expression of choice in accord with law is acceptance of individual identity. Curtailment of that expression and the ultimate action emanating there from  on the conceptual structuralism of obeisance to the societal will destroy the individualistic entity of a person, the social values and morals have their space, but they are not above the constitutionally guaranteed freedom. The said freedom is both a constitutional and human right. Deprivation of that freedom which is ingrained in choice on the plea of faith is impermissible. The Hon’ble Supreme Court of India in Justice K.S.Puttaswamy v. Union of Indiareported in 2017 (4) KLT 1,held that the autonomy  of the individual is the ability to make decisions on vital matters of concern to life. The intersection between one’s mental integrity and privacy entitled individual to freedom of thought, the freedom to believe in what is right and the freedom of self determination.

11. The Mental Health Care Act 2017 which emphasizes  the rights of a mentally ill person has introduced many novel aspects including the right to make an advance directive as provided under Section 5 of the Act. Section 5 stipulates that every person who is not a minor shall have a right to make an advance directive in writing specifying  the way in which the person wishes to be cared and treated for mental illness, the way a person wishes not to be cared for and treated for mental illness etc , in the event of him/her falling mentally ill at a future point of time. The manner in which an advance directive could be made and the procedure of maintaining an online register by the board under the Act has also been enumerated. This is a unique provision whereby any or all persons can issue advance directives to clearly specify as to what needs to be done in the event of any person becoming mentally ill. The checks and balances of the use or abuse of the said right has also been being considered and enumerated in the Mental Health Care Act 2017. The Act also elucidates the appointment of a nominated representative under the Act for the purpose of giving due care to the mentally ill person. The Act also specifies the rights of mentally ill person as regards the right to information under Section 22 of the Act, the right to confidentiality under Section 23 of the Act, the restriction on release of information in respect of mental illness under Section 24 of the Act, the right to access medical records under Section 25 of the Act, the right to personal contacts and communication under Section 26 of the Act, the right to legal aid under Section 27 of the Act and the right to make complaints about deficiencies in the provision of services under Section 28 of the Act.

12. The ambiguity as far as dealing with complaints by a mentally ill person regarding provision of services before the concerned board created under Section 74 of the Act is a question that would have to be considered  by the Courts of law. Section 73 underChapter XI of the Act postulates about the constitution of Mental Health Review Boards. Section 74 speaks about the composition of such a review board.

13. Section 74 reads as follows: Composition of Board: (1) Each board shall consist of  - (a) A District Judge, or an officer of the State Judicial Services who is qualified to be appointed as District Judge or a retired District Judge who shall be chairperson of the Board, (b) representative of the District Collector or District Magistrate or Deputy Commissioner of the districts in which the Board is to be constituted, (c) two members of whom one shall be a psychiatrist and the other shall be a medical practitioner, (d) two members who shall be persons with mental illness or care  givers or persons representing organizations of persons with mental illness  or care-givers or non-governmental organizations working in the field of mental  health, (2) A person shall be disqualified to be appointed as the chairperson or a member of a Board or be removed by the State Authority, if he – (a) has been convicted and sentenced to imprisonment for an offence which involves  moral turpitude, or, (b) is adjudged as an insolvent or, ((c) has been removed or dismissed from the service of the Government or a body corporate owned or controlled by the Government; or (d) has such financial or other interest as is likely to prejudice the discharge of his functions as a member; or (e) has such other disqualifications as may be prescribed by the Central Government , (3) A chairperson or member of a Board may resign his office by notice  in writing under his hand addressed to the Chairperson of the State Authority  and on such resignation being accepted, the vacancy shall be filled by appointment of a person, belonging to the category under sub-section (1) of Section 74. 

14. On a perusal of the above section, it would appear at first blush that as per Section 74(1)(d), that two members who shall be persons with mental illness, shall be mandatorily a part of the Board. This would militate against the fundamental principles of law of having two mentally ill persons taking part in the decisions of the Review Board.  This is a question that would have to be brought to the notice of the Constitutional Courts and tested on the anvil of Law as to whether such a provision could be constitutionally valid . But another way of appreciating this aspect, according to some, would be by arguing that , being a rights perspective based Legislation, the Legislature in its wisdom had deliberately introduced this clause so that the two mentally ill persons in the Board would empathize with the complaints of the mentally ill persons when they approach the Review Board with complaints of the kind of treatment received from the Mental Health Establishment under Section 77 of the Act. Be that as it may, the legal competency for a mentally ill person to sit in the Board and take binding decisions as regards the treatment given to another patient and such other matters would be questionable in a Court of Law and justiciable, despite an  Appeal being provided to the High Court under Section 83 of the Act as against the decisions of the Review Board. For whatever reason, despite the coming into force of the Act in 2018, such a Review Board has not been constituted as yet by our State despite Writ Petitions having been filed before our High Court, which are pending consideration.

15. It may not be out of place to point out at this stage that Section 33 of the said Act provides the power to the Central Government to establish an authority to be known as the ‘Central Mental Health Authority’. Section 34 under Chapter VII of the Mental Health Care Act 2017 stipulates the composition of the Central Mental Health Authority. Sub-Clause (m) of Section 34  stipulates that two persons representing persons who have or have had mental illness, to be nominated by the Central Government-Members. Section 46 under Chapter VIII of the Mental Health Care Act 2017 stipulates the composition of the State Mental Health Authority whereby under sub-clause (1) of Section 46 stipulates that two persons representing persons who have or have had mental illness to be  nominated by the State Government-Member. A reading of the above Sections 34 and 46 indicate that both the Central Mental Health Authority and the State Mental Health Authority could have two persons representing persons who have or have had mental illness to be nominated by the appropriate Government. If this provision is taken into consideration, then the question of having two members who shall be persons with mental illness or care-givers as stipulated in Section 74 sub-clause(d) would be questionable. There is no reasonable rationale as to why Section 74 alone should include two persons with mental illness and not a representative. This is a question that the Constitutional Courts will and ought to consider in the event of the same being challenged.

16. Though under Section 14, in Chapter IV of the Mental Health Care Act, there is a provision for appointment and revocation of a nominated representative and the procedure for appointment of such nominated representatives and its removal and the functions of the nominated representative, the Mental Health Care Act 2017 is conspicuously silent regarding the appointment of a guardian for the mentally ill person, especially in order to execute any document in respect of the assets belonging to the mentallyill person. For this purpose, the reliance can now only be placed under the “Rights of Persons with Disabilities Act 2016” which has repealed the earlier Act “The Persons with Disabilities (Equal Opportunity, Protection of Rights and Full Participation) Act 1995 (1 of 1996). Under this “Rights of Persons with Disabilities Act 2016”, Section 2(s) defines person with disability to mean a person with long term physical, mental, intellectual or sensory impairment which, in interaction with barriers, hinders his full and effective participation in society equally with others. Earlier in “The Persons with Disabilities (Equal Opportunity, Protection of Rights and Full Participation) Act 1995 (1 of 1996), mental illness and mental retardation were defined under Section 2(i) as ‘disability’.  Under the new Act - “The Rights of Persons with Disabilities Act 2016”  since mental illness per sehas not been included, Section 2(s) “Persons with Disability”  is now being interpreted to include mental illness also.  As a result, for appointment of a guardian for a mentally ill person, Section 14 under the Rights of Persons with Disabilities Act 2016 provides for a provision for appointment of a guardian by the District Court or any designated authority as notified by the State Government. Therefore for the purpose of appointment of a guardian for a mentally ill person, one has to take recourse to the District Court under the Rights of Persons with Disabilities Act 2016 and not under the Mental Health Care Act 2017. It is also beneficial to note at this stage that while considering the application for appointment of guardian under this Act, the Section also refers to “ in Consultation with such person, in such manner as may be prescribed by the State Government”. Now , if an application is preferred before the District Court under Section 14 with regard to a mentally ill person for the purpose of providing adequate and appropriate support to take legally binding decisions on his behalf, whether the word “Consultation” would mean “concurrence” or merely “dissemination of Information” will also have to be considered and interpreted by the Courts of Law.   However, a further  incongruity which has now crept in is that the State Government has recently  under Section 14(3) of the said Act notified the District Collector as the Appellate Authority for preferring an Appeal under Section 14(3) as against an order by the District Court under Section 14(1). This is not constitutionally valid as the District Collector cannot be an Appellate Authority over a District Judge and therefore provisions will have to be made to either denotify  the District Collector as the Appellate Authority or notify some other authority  under Section 14(1) instead of the District Court. This has ultimately resulted in an imbroglio which ought to be considered and remedied.

17. As far as the persons with mental retardation is concerned, the same now comes under the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act 1999 under Section 2(g) of the said Act.  Section 14 of the said Act also provides for appointment of guardian for persons with disability including mental retardation.  The application for appointment of the mentally retarded person under the said Act will have to be filed under Section 14 of the said Act before the District Collector (District Magistrate or a District Commissioner) of the District who is the head of a Local Level Committee under the said Act. It is thus clear that appointment of guardians for a mentally retarded person under the  National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act 1999 can be entertained only by the District Collector as the Chairman of the Local Level Committee. It has been noticed that many such applications for appointment of guardian under the said Act are pending consideration before the District Collectors  in various districts and Writ Petitions are being filed to direct the authorities to dispose such applications expeditiously.

18. A pertinent question had also been considered by the Division Bench of our High Court as to whether there is any Legislation governing a person in a “permanent vegetative state” or in other words a “Comatose state”. In the decision Shobha Gopalakrishnan v. State of Kerala reported in 2019 (1) KLT 801, the Division Bench of our High Court has held that no appointment of any Guardian to such person lying in a “Comatose state” is seen envisaged under the Mental Health Care Act 2017 and no enabling provision in this regard is brought to the notice of this Court by any of the parties and therefore proceeded to issue guidelines ,in such a judicial vacuum, under Article 226 of the Constitution of India.

19. The ideal solution for any possible misinterpretations of the provisions of all the three Acts is to codify all the three enactments and enact one new  comprehensive legislation covering all sorts of illnesses under one Umbrella with clear provisions for appointment of guardian and such other authorities in one enactment. For this, an in-depth study of the various laws including the three enactments will have to be undertaken and effort should be made to bring in a new legislation, for which there should be a political Will and a commitment to the less fortunate brethren of our society. As Amicus Curiae, in the mental health matters in our High Court from 2005 onwards it has been my humble duty and endeavour to ensure that all mentally ill persons , are given due care, protection, treatment and rehabilitation as far as possible, within my limited means. The designated Judges over the past 15 years have also been extremely pro-active in ensuring that proper treatment, care, protection and rehabilitation is afforded to such persons expeditiously and effectively without laying too much emphasis on procedural Law.  I have attempted to place on record only some of the aspects in the above three enactments which may  possibly  be of some help to my colleagues in our profession.

Independence of Judiciary in India and Proposal of Prof.K.T.Shah
In the Constituent Assembly

(By Devi A.R., Section Officer, Law Department, Govt.Secretariat, Thiruvananthapuram)

The term independent indicates the existence of particular fact or a system by itself, without the support of any external factors and uninfluenced by those factors at any instance. When it comes to the independence of judiciary it can be defined as a judicial system which is not influenced by other branches of the Government. The concept of independence of judiciary may be well located in the Montesquieu’s theory of separation of power and it is also deep routed to the principles of rule of law.

In Indian democratic system independence of judiciary is profoundly imparted and the system is supposed to keep this judicial independence alive even in any worse political situation. Independence of judiciary is considered as the basic structure of the constitution and it is so declared by the Apex Court through its judicial pronouncements.

Coming straight off to the recent controversy over the nomination of the former Chief Justice of Supreme Court to Rajya Sabha by the Honb’le President of India, this nomination was widely discussed in every organ of the State and it remained in discussions for a long  time in the fourth estate of the State. Legally speaking such a nomination is not against the exsisting constitutional provision or any other law for the time being in force even then the principles of separation of powers got trembled by such nomination. The situation were more or less similar when the retired Chief Justice was appointed as the executive head of the State. Regarding the post retirement appoint-ment of Supreme Court Judge the basic law governing is Art.124(7). The provision envisages that “No person who has held office as a Judge of the Supreme Court shall plead or act in any court or before any authority within the territory of India”.

This legal provision neither expressly or impliedly avert the nomination of a retired Chief Justices of the Supreme Court to the Rajya Sabha or being appointed as the executive head of a State. Application of various rules of interpretation also cannot provide a different conclusion on it. In this circumstances the discussion warrants the appraising of the opinion of the constitution framers regarding the constitutional provision concerned. Art.124(7) of the Constitution of India corresponds to Article 103(7) of the draft constitution,1948.On 24th May 1948 the constituent assembly debated over Article 103.Regarding clause (7) various amendments were proposed in the constuient assembly. Some members including K.T.Shah proposed that that judges should be debarred from holding any executive office  after retirement. But many others contended that it will be unfair to limit the activities of  Judges post-retirement. The Chairman of the Drafting Committee agreed to the second view. He was of the opinion that only a retired judge would possess the experience and capability necessary to perform public service. Consequently, the amendments proposed by K.T.Shahand others who supported him were negatived.

On reading the constituent assembly Debates on the post retirement appointment of the Judges of the highest court, it is clear that some of the constitution framers had a strong view that the retired Judges should be debarred from the holding any executive office.Amendment No.1843 proposed by K.T.Shah*in the constituent assembly is an attention-grabbing one. He proposed that:  “That after clause (2) of Article 103, the following new clause be added:-  ‘(2A) Any person who has once been appointed as Judge of any High Court or Supreme Court shall be debarred from any executive office under the Government of India or under that of any unit, or, unless he has resigned in writing from his office as Judge, from being elected to a seat in either House of Parliament, or in any State Legislature.”  

He substantiated his amendment in the following words:

“This follows the general principle I have been trying to lay before the Houses viz., or keeping the Judiciary completely out of any temptation, and contact with the executive or the legislative side. Whether during his tenure of office, or in the ordinary course of judgeship or even on retirement, I would suggest that there should be a constitutional prohibition against his employment in any executive office, so that no temptation should be available to a judge for greater emoluments, or greater prestige which would in any way affect his independence as a judge. I further suggest also that a judge should be free to resign his office and then it would be open to him to have all the rights of an ordinary citizen, including contesting a seat in the legislature, but certainly not during his tenure of office.  I consider that these are so obvious that no further words need be added to support it. I would only say once more that in the past we had bitter experience of high-placed Government servants who had risen fairly high in the scale of service, used to secure on retirement influential positions in Britain or directorships in concerns operating in this country. On account of the official position which they had held here in the past, they were able to exercise an amount of undue influence. Such practices the Congress and other parties had frequent occasion to object to. As such I suggest that that practice should now be definitely avoided….”

On analysing the amendment proposed by K.T.Shah it seems to be highly recommendable for its insertion in our present Constitution. We already have the precedent of 42nd amendment of the Constitution to the extent that it inserted the term ‘secularism’ in the preamble. The inclusion of the secularist ideology in the Constitution was a negatived proposal  in the constituent assembly. Now, the Parliament may adopt the suggestion put forwarded by Prof.K.T.Shah in the constituent assembly, via amendment No.1843, with or without modification by exercising the legislative wisdom.But there is no doubt about the fact that such an inclusion will definitely strengthen the principles separation of powers, rule of law and ultimately the Indian democracy.

*https://www.constitutionofindia.net/constitution_assembly_debates volume/8/1949-05- 24#8.90.62

The Law of Environmental Clearance -- Yesterday, Today And Tomorrow

(By P.B.Sahasranaman, Advocate, High Court of Kerala)

Environment Impact Assessment (EIA) is an early warning system. Before the commencement of a development activity an assessment of the adverse effect of the
project on the environment has been made mandatory. Till 1994, the EIA in India was purely an administrative decision. It was in 1994 the first notification for EIA was mandated for Environmental Clearance (EC) for huge projects scheduled to it. The said notification was replaced in 2006¹ prescribing certain procedure in the process for EIA. This notification was amended several times based on various directions from the Courts. Supreme Court
in 2012²  in public interest issued a general direction on mining making it applicable to all minor mineral quarries which have less than five hectares. The ambiguity in the classification of the “Building and Construction project” and “ township and area development project” has been pointed out by the Supreme Court while considering the project of Okhla Bird Sanctuary in 2011³. Several High Courts, as well as the National Green Tribunal,(NGT), has imposed more conditions for the protection of the environment.Based on the same amendments were carried out by the Ministry of Environment, Forest and Climate Change (MoEF&CC) from time to time.

The present proposal now made by the Ministry of Environment, Forest and Climate Change⁴ by March 2020 notification are to streamline the process of issuance of EC, conducting of EIA, decentralisation and implementation of the directions issued by the Courts. The proposal is based on the principle of sustainable development by which the environment is protected without affecting the environment.It refers to two judgments. The Jharkhand High Court⁵ has held that the consideration for the proposal for Environment Clearance must be examined on its merits, independent of any proposed action for alleged violation of the environmental laws. The NGT⁶ also held that MoEF shall strengthen the monitoring mechanism for compliance of conditions of Prior Environment Clearance.

Before the commencement of any development of any land,the EC has been made mandatory for certain projects. If a project is halted while implementing there will be an economic loss. For huge projects, a draft EIA has to be prepared and the public is
consulted to know the veracity of the project. Till now several project proponents got the EIA prepared by some agency who used to give tailor-made reports. Certain reports are cut and paste of similar projects. To stop such practice, the 2020 notification mandates accreditation with the National Accreditation Board for Education and Training of Quality Council of India or any other agency, as may be notified by the Ministry from time to time for such consultant organisations. Such institutions are accountable for the preparation of EIA based on real facts.

The categorisation of projects as A, B1 and B2 is done based on the magnitude of the project on the ecology. Public consultation is undertaken for all “Category A and B1” projects. The EIA will not be complete without any public participation. The locally affected persons and other stakeholders who are nearby are consulted. The environmental
aspects highlighted are again consulted with the experts. Finally, the view of the project proponent is ascertained. Previously the project proponent used to manage such public hearing with his men to avoid a negative view of the project. The 2020 notification
mandates the making available the soft copy of the project, EIA and other reports in web sites. The entire hearing to be video graphed to make it more transparent.

The application for environmental clearance for the Athirappilly Hydro Electric Project was under consideration before the MoEF.The public hearing was mandated for such projects from 1997. Kerala High Court⁷ has declared that public hearing is required for the said project. The Electricity Board contended otherwise. The public hearing was
conducted on 06.02.2002. Since the majority of the people have objected to the project the hearing panel unanimously found that the Rapid EIA prepared was incomplete and recommended for comprehensive and participatory EIA. Thereafter the report was
prepared and a hearing was conducted. But this time the Report was not published and therefore the public hearing was found to be not meaningful, the Kerala High Court declared⁸.

The 2006 notification schedule contains only eight types of projects whereas the 2020 notification schedules forty-three projects. It includes even the Municipal waste management, ship breaking, elevated roads, flyovers, etc. The old notification does not define the terms used in it. The result is that various interpretations are given by different Courts. To avoid that the new notification defines sixty terms making more transparency
in the law and reducing the litigations.

Mining is an activity which degrades the environment, which comes within the ambit
of EIA notification. No EIA is required if the mining area is less than 5 ha. But permissions can be granted on the basis of District Survey Report of such minor minerals. At present most of the District Survey Reports prepared will not show the crucial details of the
mineral wealth available. The 2020 proposal gives a definite mandatory requirement for such Reports which must show the mineral wealth available for mining.

The new notifications exempt small scale units engaged in certain works. Extraction of ordinary clay or sand by manual mining, by the Kumhars (Potter) to prepare earthen pots, lamp, toys, etc., as per their customs are not in the same footing as other mining operations. Mining without using any machinery is exempted. Removal of sand deposits on the agricultural field after a flood by farmers, customary extraction of sand and ordinary earth from sources situated in Gram Panchayat for personal use or community work in the village, community works like desilting of village ponds or tanks, construction of village roads, ponds, bunds undertaken in Mahatma Gandhi National Rural Employment and Guarantee Schemes, other Government-sponsored schemes, and community efforts, Community works like desilting of village ponds or tanks, construction of village roads, ponds, bunds undertaken in Mahatma Gandhi National Rural Employment and Guarantee Schemes, other Government-sponsored schemes, and community efforts, Manual extraction of Lime shells (dead shell), shrines, Digging of the foundation for buildings, etc., within the intertidal zone by the traditional community, etc., are some of the projects exempted from the obtaining of prior EC or permissions. No EIA or public consultation is required for such projects.

The present law requires that building and construction projects above 20,000 sq.mts. require Environmental Clearance. This was amended⁹ on 15.11.2018 increasing the limit to 50,000 sq.mts. which was under challenge in Delhi High Court. The new notification retains the 20,000 sq.mts. limit and the EC can be obtained from State Authority.

The new proposed notification also put a duty of regulation of the project on the authority which grants clearance. The regulatory authority based on the information available or environmental issues brought to the notice after the issuance of EC may impose additional conditions as it deems fit. Such an inherent power on the authority will protect the environmental hazard which has arisen subsequently, like natural disasters.

In so far as Kerala is concerned EC was made mandatory for Government projects by a notification issued on 13.01.1978¹⁰. All development schemes costing more than ten lakhs should be referred to the Committee on Environmental Planning and Co-ordination for review and assessment of environmental implications to integrate environmental concerns. Their clearance is mandatory for such a project. But that notification is ignored even by the State. But Supreme Court by its judgment rendered on 2013¹¹ directed to demolish the rainbow model restaurant constructed on the banks of Periyar River in Aluva. Thereafter the Kerala Government has withdrawn the said 1978 order for the reason that it stands against development!

Litigations were launched in Supreme Court on EIA on projects like Sardar Sarovar Dam-¹²,Konkan Railway-¹³, Koodankulam Thermal project-¹⁴,etc. After the dismissal of the cases, the projects were launched and it has proven that it benefitted the general public. Projects like Silent valley and AthirappillyHydro Electric project were shelved by the peoples’ movement for the reason that it will harm the ecology. Making more clarity on the law constructions is very much essential so that demolitions like the one happened in Maradu¹⁵, where the stakeholders do not know that it is violative.

The present proposal is legislation for tomorrows’ generation based on the principle of sustainable development. Investment harming environment is not possible. There is no conflict with the State legislations like Building Rules which is intended to protect the environment. If the State Government feels that the conditions imposed by the Central legislation are insufficient, it is up to the State to impose more restrictions. But the minimum standards prescribed in the EIA cannot be diluted. The regulatory authority is empowered to impose more conditions if the conditions already imposed is not sufficient.It strengthens the monitoring mechanism.The notification only supports the environmentally friendly projects and not projects which harms the ecology.

It may be noted that Government of India has inherent powers under Rule 5(4) of the Environment (Protection) Rules, 1986 to dispense with the requirements of notice for making changes in the conditions even without a draft notification. But the Government of India would like to know the public view on the same and issued the draft notification.

Foot note:

1.   S.O.1533 (E) dated the 14th September, 2006.

2.   Deepak Kumar v. State of Haryana (2012 (1) KLT Suppl.60 (SC) = (2012) 4 SCC 629).

3.   IN RE.v. Construction of Park At Noida Near Okhla Bird Sanctuary Anand Arya & Others

      (2011) 1 SCC 744), 2.

4.   S.O.1199(E), dated 23.03.2020. Gazette of India, 1071, dated 23.03.2020.

5.   Hindustan Copper Limited v. Union of India. JHC , LAWS (JHAR) - 2014-11-33.

6.   Sandeep Mittal v. MoEF&CC. OA No.837/2018.

7.   Chalakudy Puzha Samrakshna Samithi v. State. O.P.Nos.1774 of 2001, dated 17.10.2001.

8.  Athirappilly Grama Panchayat v. Union of India. W.P.(C) No.11254 of 2005, dated 23.03.2006.

9.  Notification 15th November 2018 - S.O. 5736(E).

10.S.O.944 (E) , dated 15.12.1990.

11.Association for Envioronment Protection v. State of Kerala (2013 (3) KLT 201 (SC).

12.Narmada Bachao Andolan v. UOI. (2001 (1) KLT OnLine 1014 (SC).

13.Goa Foundation v. Konkan Railway Corporation (1992 (2) KLT OnLine 1024 (Bom.).

14.G.Sundarrajan v. Union of India reported in (2013 (2) KLT SN 119 (C.No.152) SC).

15.Kerala Coastal Zone Management Authority v. Maradu Municipality (2019 (2) KLT 835 (SC)).

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.

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.