India Legal Update Feb 2012

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Retrenchment- The Judicial Journey By Dipak Rao & Shradha Dubey

Retrenchment is a much dreaded word in the corporate world both for the employee as

well as the employer. While for employee it means end of his livelihood for the employer it

means complying with the procedures and incurring cost before it can retrench an

employee. In a legal juridical sense, it has a long history of creating conflicting

interpretations, which have been clarified and reiterated from time to time. This leads us

to the question as to what is the meaning and scope of the term „retrenchment‟. The

dictionary meaning of the term retrenchment is “discharge of surplus labour”. In Industrial

Disputes Act, 1947 (the “Act”), the term has been defined in Section 2 (oo).

In a legal juridical sense,

Retrenchment has a long

history of creating

conflicting interpretations,

which have been clarified

and reiterated from time to

time.

FEBRUARY 2012

LEGAL

SUITE

INDIA LEGAL UPDATE is a journal of Singhania & Partners which offers a legal perspective on the new business climate and

opportunities in India in keeping with the existing laws, current happenings and events in Corporate India.

Inside This Issue

Retrenchment- The Judicial

Journey By Dipak Rao & Shradha Dubey

Web Censorship- Judicial

developments By Rohit Jasiwal & Siddharth Dubey

News Quest

Synapse

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PAGE 2 EMPLOYEE NEWSLETTER

The reason why the meaning of the term assumes significance is that both the employer

and the employee try to interpret the word to suit their own cause. As the employer has to

follow certain condition precedent before retrenching the employee, the employer

always tries to avoid the situation by taking the ground that the termination is not

retrenchment in terms of Section 2 (oo) so that they may terminate the employment

without fulfilling the condition precedent. On the other hand, the employee tries to bring

its termination under Section 2 (oo) for two reasons – Firstly, to argue that as the

termination tantamount to retrenchment and the employer did not fulfill the conditions

precedent, and therefore the same is bad in law, and Secondly, if it is proved that the

termination is retrenchment then the workman would be entitled for the retrenchment

benefits provided under Section 25 F of the Act.

MEANING OF RETRENCHMENT

While the ordinarily accepted meaning of retrenchment is discharge of surplus labour,

Section 2 (oo) of the Act defines retrenchment as to mean termination by the employer of

the service of a workman for any reason whatsoever. The definition also provides for the

following exceptions, in which case the termination would not amount to retrenchment:

(i) Termination as a punishment inflicted by way of disciplinary action;

(ii) Voluntary retirement of the workman;

(iii) Retirement on reaching the age of superannuation;

(iv) Termination due to non-renewal of contract; and

(v) Termination on the ground of continued ill-health.

The issue is whether the definition provided in Section 2 (oo) also has to be interpreted in

consonance with its ordinarily accepted meaning or whether the statutory meaning goes

beyond the ordinarily accepted connotations of retrenchment. The Supreme Court and various High Courts in a number of cases have analyzed the

definition of the term „retrenchment‟. In this Article we will analyze those case laws to

understand the meaning of the term „retrenchment and position of the law in this regard.

INDIA LEGAL UPDATE # FEBRUARY 2012 > >LEGAL SUITE | P02

JUDICIAL APPROACH ON RETRENCHMENT

Before the Supreme Court in Piparaich Sugar Mills Ltd. Vs Pipraich Sugar Mills Mazdoor Union 1 the issue raised was whether the

termination of services of workman on the ground of closure of undertaking is retrenchment in terms of Section 2 (oo) of the

Act. It was argued on behalf of the workman that as ordinarily the term retrenchment means discharge of surplus labour, and in

the case of closure the whole work force is dispensed with and therefore, in substance there is no difference between closure

and normal retrenchment. However, the Supreme Court did not accept this contention and held that retrenchment in ordinary

parlance means discharge of surplus labour and it cannot include discharge on closure of business.

In Hariprasad Shivshankar Shukla Vs A. D. Divikar 2 the issue raised before the Constitution Bench of the Supreme Court was the

interpretation and scope of the meaning of the term retrenchment. The fact in this case was that the workmen were

terminated due to closure of the undertaking and they were claiming compensation under Section 25F of the Act. The SC

observed that the definition of retrenchment has four limbs:

(i) Termination of the service of a workman;

(ii) By the employer;

(iii) For any reason whatsoever; and

(iv) Otherwise than as punishment inflicted by way of disciplinary action.

The Supreme Court observed that the definition provided in Section 2 (oo) of the Act is very wide but the real question is

whether the term „retrenchment‟ has to be understood in its ordinary accepted notion, i.e, discharge of surplus labour or does it

even include the termination of service of all workmen in an industry when the industry itself ceases to exist.

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PAGE 3 EMPLOYEE NEWSLETTER

The argument of the workmen was that if the retrenchment is only to be understood as discharge of surplus labour then the

expression “for any reason whatsoever” used in Section 2 (oo) would be useless. The SC did not agree to this contention and

observed that when a portion of the staff or labour force is discharged as surplus in a running or continuing business, the

termination of service which follows may be due to a variety of reasons; e.g., for economy, rationalization in industry, installation

of a new labour-saving machinery etc. SC was of the view that the legislature, in using the expression 'for any reason whatsoever'

in effect states that it does not matter why you are discharging the surplus; if the other requirements of the definition are fulfilled,

it is retrenchment. In other words, the SC held that as the discharge of surplus labour could be for a variety of reasons, the use of

the expression “for any reason whatsoever” has to be understood only in that context.

The SC in this case was of the view that the termination of workman due to closure of undertaking is not retrenchment as it would

be against the entire scheme of the Act. The SC also observed that the definition of retrenchment is discharge of surplus labour

for any reason whatsoever. It may also be important to note that the legislature introduced Section 25 FFF in the Act after the

ruling in Hariprasad which states that in case of closure of undertaking the workman would be entitled to retrenchment benefits

under Section 25 F of the Act.

CONFLICTING RULING

A three judge bench of the Supreme Court again discussed this issue in The State Bank of India Vs Shri N. Sundara Money 3 . The

facts of this case were that the workman was hired on a fixed term contract and on the efflux of the time the employed was to

terminate. The issue before the court was whether the termination of employment on expiry of a fixed term contract tantamount

to retrenchment. It may be noted that the exception that termination due to non-renewal of contract is not retrenchment was

only introduced on 18th August, 1984, i.e, after the judgment was delivered in this case.

The argument on behalf of the employer was that as the termination due to expiry of the contract was not discharge by

„employer‟ and therefore the same cannot be termed as retrenchment. The SC was of the view that the keywords in the

definition of retrenchment are „termination …… for any reason whatsoever‟. SC was of the view that a termination takes place

where a term expires either by an active step of the master or the running out of the stipulated term. Termination embraces not

merely the act of termination by the employer, but also the fact of termination howsoever produced. The SC further held that the

courts must not consider the dictionary meaning of a term when the definition of that term in the statute connotes a different

meaning.

In effect, the SC was of the view that term retrenchment includes any termination for whatsoever reason and the definition of the

term retrenchment must not be construed by dictionary meaning when the statute connotes a different meaning. It would be

interesting to note that the ruling delivered by the Constitution Bench of the SC in Hariprasad Shivshankar Shukla was not referred

to in this ruling of the SC.

DECISIONS ON THE CONFLICT

This issue of contradictory rulings of SC was highlighted before a three judge bench of SC in Hindustan Steel Ltd. Vs The Presiding

Officer, Labour Court, Orissa 4 . The facts of the case were similar to the Sundra Money case as the question was whether

termination of workman on the expiry of the fixed term contract tantamount to retrenchment. The Counsel for the employer

accepted that in terms of the ruling of the SC in Sundra Money, the termination of workman on expiry of the fixed term contract

would tantamount to retrenchment. However, the Counsel argued that the SC ruling in Sundra Money is in apparent conflict with

the Constitutional bench ruling of SC in Hariparsad, and as the Hariprasad ruling was delivered by a larger bench, the Sundra

Money‟s case requires reconsideration.

The SC observed that the decision in the Hariprasad case was that the words “for any reason whatsoever” would not include a

bonafide closure of the whole business because it would be against the entire scheme of the Act. The SC further observed that

giving full effect to the words “for any reason whatsoever” would be consistent with the scope and purpose of Section 25 F of the

Act and not contrary to the scheme of the Act. On this basis it was held that the decision in Sundra Money is not inconsistent with

Hariprasad. While the SC in Hindustan Steel had stated that the decision in Hariprasad was limited to its facts, even then various high courts

were following Hariprasad. The division bench of Delhi High Court in The Management of Sri Ram Institute of Industrial Research Vs

N. L. Kakkar 5 relied on Hariprasad case to hold that the retrenchment means only termination of surplus staff. The High Court

INDIA LEGAL UPDATE # FEBRUARY 2012 > >LEGAL SUITE | P03

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PAGE 4 EMPLOYEE NEWSLETTER

INDIA LEGAL UPDATE # FEBRUARY 2012 > >LEGAL SUITE | P04

Further held that the decision in Sundra Money and Hindustan Steel were delivered by three judge benches and they could not

depart from the law laid down by the constitutional bench in Hariprasad. The High Court further elaborated that the meaning of

retrenchment was not emphasized in the Hindustan Steel and Sundra Money as the sole contention of the employer was that a

discharge by efflux of time was not discharge by the „employer‟.

A similar view was taken by the full bench of the Kerala High Court in L. Robert D’Souza Vs Executive Engineer, Southern Railway 6 ,

wherein the Kerala High Court held that the pronouncement by the SC in Hariprasad is a clear authority for the position that even

under the definition contained in Section 2 (oo), the expression retrenchment will take in only the cases of termination of services

of workman effected by way of discharge of surplus labour or staff. The High Court analyzed the Sundra Money and Hindustan

Steel rulings and observed that the facts of both these cases were that the employee was not required by the employer beyond

the term of the contract and therefore, they became surplus and termination on the ground of surplus is retrenchment. On this

ground High Court held that the proposition laid down in Hariprasad has not been in any way departed from the ruling in Sundra

Money‟s case.

The issue of contradiction between Hariprasad and Sundra Money case once again came up for consideration before the three

judge bench of SC in Santosh Gupta Vs State Bank of India 7 . In this case, the argument forwarded was that since Hariprasad was

delivered by a larger bench therefore, it must prevail over the conflicting decision of Sundra Money. The SC relied on Hindustan

Steel ruling to hold that there was no inconsistency between Hariprasad and Sundra Money. SC held that the Hariprasad case has

been misunderstood and the Sundra Money and Hindustan Steel laid down the correct law. The SC in this case also overruled

various High Court rulings which had relied on Hariprasad including Kerala High Court ruling in L. Robert D‟Souza.

FINAL VERDICT ON THE CONFLICT

It seemed that after Santosh Gupta case the issue had been finally settled as the SC in this case had held that there was no

conflict between Hariprasad and Sundra Money and therefore, there was no question of Hariprasad having precedence over

Sundra Money. However, the dispute was far from over as the issue of contradiction between Hariprasad and Sundra Money once

again came up for consideration before the Constitutional bench of SC in Punjab Land Development and Reclamation

Corporation Limited Vs Presiding Officer, Labour Court, Chandigarh8 . The issue before the SC was whether the definition of

retrenchment in Section 2 (oo) of the Act only means discharge of surplus labour for any reason whatsoever or it means

termination of the workman by the employer for any reason whatsoever other than the exception provided therein.

ARGUMENTS

The first argument taken up by the employer was that the decision in Sundra Money and the subsequent rulings which followed it

are per incuriam 9 as they have failed to apply the law laid down by the Constitutional Bench in Hariprasad case. It was further

argued that the Constitutional Bench in Hariprasad thought it necessary to interpret Section 2 (oo) and therefore, the

interpretation given by Hariprasad cannot be brushed aside as Obiter10 and the subsequent lower strength benches were bound

to follow Hariprasad.

The second argument which was forwarded by the employer was that the decision in Sundra Money and the subsequent rulings

which followed it are also per incuriam because of the reason that they failed to take note of Section 25 G and 25 H of the Act:

Argument on Section 25 G

Section 25 G provides that if any workman has to be retrenched the employer shall ordinarily retrench the workman who was the

last person to join in that category, unless for reasons to be recorded the employer retrenches any other workman. In other words,

Section 25 G prescribes “last to come first to go”. It was argued that this Section could only be applied in the case of discharge of

surplus labour and not for any termination simpliciter. If retrenchment is to be understood as any termination, then the provision of

Section 25 G would be useless.

Arguments on Section 25 H

Section 25 H provides that where any workmen are retrenched, and the employer proposes to take into employment any other

person, the opportunity must be given to the retrenched workmen and the retrenched workmen who offer themselves for re-

employment must be given preference over others. It was argued that Section 25 H which deals with re-employment of

retrenched workmen, can also only be applied in case of discharge of surplus labour and will not have any application to a case

of termination simpliciter because of the fact that the employee whose services have been terminated, would have been holding

a post which would instantly become vacant as a result of the termination of his services and under Section 25H he would have a

right to be reinstated against the very post from which his services have been terminated which would render the provision itself an

absurdity.

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PAGE 5 EMPLOYEE NEWSLETTER

CITATIONS

1 AIR 1957 SC 95

2 AIR 1956 SC 121

3 AIR 1976 SC 1111

4 AIR 1976 SC 31

5 ILR 1978 Delhi 482

6 ILR 1979 (1) Kerala 617

7 AIR 1980 SC 1219

8 (1990) 3 SCC 682

9 Per Incuriam means through lack of care or through inadvertence

10 An opinion voiced by a judge that has only incidental bearing on the case in question and is therefore not binding.

11 The legal principle upon which the decision in a specific case is founded

SC OBSERVATIONS

On the first argument, SC observed that the question to be determined was whether the interpretation given to Section 2 (oo)

by Hariprasad is the obiter or the ratio11 . The SC was of the view that ratio of any ruling can only be ascertained by an analysis

of the material facts which the court whose decision is in question itself holds to be material. The SC observed that in Hariprasad

the question which the Court put to itself for decision was whether Section 2 (oo) merely gives effect to the ordinary accepted

notion of retrenchment in an existing running industry or does it go beyond that to include the termination of services of all

workman in an industry when the industry itself ceases to exist. The SC was of the view that the sole question for the decision in

Hariprasad was that the Act postulated the existence and continuance of an Industry and when the industry itself was closed

down the very substratum disappeared and the Act could not regulate the employment in the absence of an industry. The

question whether retrenchment did or did not include other terminations was never required to be decided in Hariprasad and

could not, therefore have been, or taken to have been decided by this Court. In other words, the SC in this case held that the

interpretation of Section 2 (oo) in Hariprasad was orbiter and the benches of lower strength are not bound to follow the obiter

of a larger bench.

On the second argument, the SC was of the view that there are apparent incongruities in the provisions, but Section 25 G and

Section 25 H must be read harmoniously with Section 2 (oo).

INTERPRETATION OF SECTION 2 (OO)

After countering both the arguments, the SC proceeded to interpret the definition provided in Section 2 (oo) of the Act. The SC

observed that the legislature defined the term retrenchment to mean termination by the employer of the service of a workman

for any reason whatsoever. After defining the term retrenchment, the legislature also provided for certain exclusions. If the

intention of the parliament would have been to restrict the meaning of retrenchment to termination of surplus labour alone,

there would have been no need to provide for specific exclusions.

On the basis of this reasoning the SC finally held that “retrenchment” means the termination by the employer of the service of a

workman for any reason whatsoever except those expressly excluded in the Section.

CONCLUSION

The dispute regarding the interpretation of Section 2 (oo) has been finally settled and the retrenchment as provided in Section 2

(oo) is no longer understood as only discharge of surplus labour. The retrenchment as defined in Section 2 (oo) is now

understood as any termination of the employee, for any reason whatsoever, by the employer except for the exceptions

provided in Section 2 (oo). In fact the Supreme Court and various High Courts in a number of cases have relied upon the law

laid down in the Punjab Land case while interpreting whether in a particular case the termination of employee is retrenchment

or not.

INDIA LEGAL UPDATE # FEBRUARY 2012 > >LEGAL SUITE | P05

Dipak Rao

Sr. Partner

[email protected]

Shraddha Dubey Associate

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PAGE 6 EMPLOYEE NEWSLETTER

INDIA LEGAL UPDATE # FEBRUARY 2012 > > COURT ROOM | P06

COURT

ROOM

Web Censorship - Judicial Developments By Rohit Jaiswal & Siddharth Dubey

COMPLAINT BY VINAY RAI IN TRIAL COURT

A Complaint was filed in December, 2011 in the Trial court of Delhi by Vinay Rai, a journalist who

runs a Hindi and Urdu daily called Akbari from Noida, against social networking sites like Facebook

Inc., Google Inc., Yahoo, etc. on the content available on their websites, which included

obscene depictions of Jesus Christ, Prophet Mohammed and various Hindu deities.

In response to this Complaint, the Government of India (“GoI”), through the Ministry of Information

and Communication Technology, submitted its report saying that there was sufficient material to

proceed against the 21 websites for offences under Section 153-A (promoting enmity between

classes), 153-B (assertion prejudicial to national integration) and 295-A (insulting religion or religious

belief of any class) of the India Penal Code (“IPC”). The report also stated that such contents on

websites/search engines was in violation of provisions of the Information Technology Act, 2000 (“IT

Act”) read with the Information Technology (Intermediary Guidelines) Rules, 2011.

It said that after due application of “judicious mind”, it was found appropriate to proceed against

the accused persons keeping in view national harmony, integration and national interest.

Pursuant to the same, the Trial Court directed the GoI to issue summons to companies

headquartered abroad under Section 196 (Prosecution for offences against the State and for

criminal conspiracy to commit such offence) of the Code of Criminal Procedure (“CrPC”). Also, as

per Section 69A of the IT Act, the Central Government can direct any agency of the Government

or intermediary to block access by the public or cause to be blocked for access by public any

information generated, transmitted, received, stored or hosted in any computer resource.

The Trial court has directed the executives of the social networking sites to personally appear on

March 13, 2012 in the criminal case against them under Sections 292, 293 and 120B of IPC, for

posting objectionable content including promotion of enmity between groups and deliberate

malicious acts intending to outrage and after the sanction of the GoI for prosecution of

executives of companies like Google, Facebook, etc. for objectionable content posted online.

A Complaint was filed in

December, 2011 in the

Trial court of Delhi by

Vinay Rai, a journalist who

runs a Hindi and Urdu daily

called Akbari from Noida,

against social networking

sites like Facebook Inc.,

Google Inc., Yahoo, etc.

on the content available

on their websites, which

included obscene

depictions of Jesus Christ,

Prophet Mohammed and

various Hindu deities.

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PAGE 7 EMPLOYEE NEWSLETTER

INDIA LEGAL UPDATE # FEBRUARY 2012 > >COURT ROOM | P07

PETITION BY GOOGLE INDIA PRIVATE LIMITED IN THE

DELHI HIGH COURT

Thereafter, Google India Private Limited (“Google India”) filed a

Petition, Google India Private Limited vs. Vinay Rai and Anr., Crl.

M.C. 100/2012 and Crl. M.A. 386/2012, in the Delhi High Court for

quashing the orders of the Trial court to summon executives of

the social networking sites.

The Counsel appearing on behalf of the Google India

submitted that the Google is a subsidiary of Google Inc., which

cannot be said as “Intermediary” as per the IT Act. There is not

much evidence which proves that Google India has any

ownership and control over the websites. Further, Google India

also stated that they cannot develop a method to monitor

defamatory or obscene material that's been posted on their

sites as billions of people across the globe post their articles on

the websites. Further, Section 79 (exemption from liability of

intermediary in certain cases) of the IT Act had granted

protection to websites (like social networks) and tinkering with

content would remove the protection they had been granted.

Google India also submitted that the Indian subsidiary cannot

be held responsible for an act of its parent company.

Google India also tried to shift the onus of monitoring obscene

imagery online on Internet Service Providers such as Airtel, BSNL

and Reliance stating that under their license conditions they

were liable to block it. The social networking site companies

believe they can't be held legally responsible under IT Act for

content posted by third parties, however lewd or offensive it

might be. They are required to remove certain types of content

within 36 hours of being notified, including anything "ethnically

objectionable," "blasphemous," or "grossly harmful." The Delhi

High Court admitted the case and issued the notice to Vinay

Rai and the State.

PETITON BY FACE BOOK INDIA ONLINE SERVICES

PRIVATE LIMITED IN THE DELHI HIGH COURT

On the other hand, Face book India Online Services Private

Limited (“Facebook India”) also filed a Petition, Face book India

Online Services Private Limited vs. Vinay Rai and Anr., Crl. M.C.

102/2012 and Crl. M.A. 392/2012, in the Delhi High Court for

quashing the orders of the Trial court to summon executives of

the social networking sites.

The Counsel appearing on behalf of the Facebook India

submitted that it is a company incorporated under the Indian

Companies Act to carry on business in India and abroad of,

inter alia, online support services, software development,

providing technical support and services. Further, the Facebook

India does not operate or have control on the servers that host

www.facebook.com and does not have any role relating to the

policies for removal/control of content on facebook.com.

Further, the Counsel submitted that the IT Act, 2000 and IPC do

not equate an electronic record with a document. However,

for the purposes of the Evidence Act, 1872 (“Evidence Act”)

and the IPC, an electronic record may be deemed to be a

document only if the procedure under Section 65B of the

Evidence Act (Admissibility of electronic records) has been

complied with. Section 29 of the IPC defines Document, within

which the term electronic record is not included and also, has

not been amended by the IT Act. Therefore, Sections 292 and

293 of the IPC are not applicable in this case.

Further, the Counsel submitted that the Annexures allegedly

downloaded from www.Facebook.com could not have formed

the basis of the impugned Orders as the same are not

supported by a certificate/affidavit as prescribed under

Section 65B of the Evidence and, therefore, these pages

cannot be deemed to be documents. The Counsel further

submitted that the pages allegedly downloaded from

facebook.com do not contain any URL with the help of which

the content can be identified on the World Wide Web and as

such the Trial Court erred in accepting such pages on the

record without such URL.

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CITATION

1 2008 (150) DLT 769

2 Crl. P. No. 7207 of 2009

FINDINGS OF HIGH COURT TILL DATE

Order dated February 2, 2012 passed by Hon’ble Delhi High Court

The Applicant being a private person filed the Applications (Crl. M.A. 801/2012 and 802/2012) in both

the Petitions, before the Hon‟ble Delhi High Court praying that he should be allowed to intervene, on

the basis that sanction for prosecution of the websites is grossly against public interest and is violative

of the Fundamental Rights of Freedom of Speech and Expression and the Fundamental Rights to Form

Association that are enabled and facilitated by Google.Com and Facebook.Com. The Petitioners

(Google India Private Limited and Face book India Online Services Private Limited) opposed the said

Application and contended that they do not want the Applicant to contest the same, as they are

competent to defend their case. Further, they also contended that the case is not a Public Interest

Litigation, where such type of Applications is allowed.

The Hon‟ble Judge noted the contentions and observed that there was no order passed by either the

Trial Court or this Court, which curtails the Freedom of Speech and Expression of anyone. The Court

further observed that even if any such occasion arises, the Petitioners are able to defend their rights.

In light of the abovementioned observations, the Hon‟ble High Court dismissed the said Application

being devoid of merits.

In relation to the Petitions, the Hon‟ble Court heard the arguments in part and listed the matter on

February 14, 2012 for further arguments.

Order dated February 14, 2012 passed by Hon’ble Delhi High Court

The Hon‟ble Delhi high Court heard the arguments in part and listed the matter on February 16, 2012.

Order dated February 16, 2012 passed by Hon’ble Delhi High Court

The Respondent, during arguments, relied upon the judgment of Awanish Bajaj versus State1 passed

by the Co-ordinate Bench of the Delhi High Court (“Bajaj Case”) and also relied upon the judgment of

Google India Private Limited versus M/s. Visaka Industries Limited2 passed by the Andhra Pradesh High

Court (“GIPL Case”).

The Petitioners, as a counter to the arguments relied upon in the aforementioned cases, appraised

the Court that Bajaj Case is pending before the Hon‟ble Supreme Court, wherein the arguments are

over and is reserved for the judgment. Further, the Petitioners also appraised the Court that GIPL Case

is also pending before the Hon‟ble Supreme Court, wherein the Supreme Court has granted stay and

has listed the same for consideration on February 17, 2012. The Petitioners submitted that since the

issues in the Bajaj Case and GIPL Case are based on the similar issues, both the Petitions may be

adjourned till the outcome of the decisions of the Supreme Court.

In light of the above submissions, the Delhi High Court notified both the Petitions to be heard on May

03, 2012, for further action. However, the Delhi High Court directed that the Trial Court records should

be remanded back to it and did not grant the stay of the proceedings against the Petitioners before

the Trial Court. Nonetheless, the Court exempted the Petitioners from personal appearance.

INDIA LEGAL UPDATE # FEBRUARY 2012 > >COURT ROOM | P08

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PAGE 9 EMPLOYEE NEWSLETTER

CONCLUSION

This is an interesting case and must be closely followed as the outcome of it would

decide the constitutional right of freedom of speech and expression and the reasonable

constraints that can be placed on the same. Moreover, the Indian Penal Code was

enacted in the year 1860 at the time when printing was the most popular mode of

communication and expression and the said Code did not envisage „internet‟ as a

medium of expression.

Therefore, the judicial pronouncement on this case has to take into account the internet

revolution and whether the provisions of the Indian Penal Code can straight away be

applied to the virtual world.

INDIA LEGAL UPDATE # FEBRUARY 2012 > >COURT ROOM | P09

Rohit Jaiswal

Partner

[email protected]

Siddharth Dubey Associate

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PAGE 10 EMPLOYEE NEWSLETTER

INDIA LEGAL UPDATE # FEBRUARY 2012 > >NEWSQUEST | P10

Trai wants FDI cap on tower companies cut to

74%

The telecom regulator has recommended lowering the

foreign direct investment cap on telecom tower

companies to 74%, a move that will adversely impact the

Indian operations of Nasdaq-listed American Towers

(ATC) as well as stake sale plans of other tower units. At

present, 100% foreign direct investment is allowed in tower

companies but Trai wants to lower this limit and bring it on

a par with other telecom services, which are subject to a

74% cap.

SOURCE

India economy showing signs of improvement:

OECD survey

The international economic outlook is showing tentative

signs of improvement, with the momentum shift spreading

from the United States and Japan to other developed

countries, the OECD's December survey of growth

prospects showed. The survey picture was mixed in the

euro zone, where seven countries were now "pointing

towards a positive change in momentum" while the

region's overall reading dipped marginally. The OECD said

its leading indicator pointed to a "positive change ... for

the OECD area as a whole, driven primarily by the United

States and Japan, but similar signs are beginning to

emerge in a number of other developed economies."

SOURCE

US moves with India from bilateral to trilateral

assistance

With India emerging as a global economic power, the US

assistance with India is now moving from bilateral to

trilateral one, US officials have said."Our strategy with India

is going to increasingly be looking at working with the

Indians on mutual development goals which not all may

be in India; may be in third countries," a senior Obama

administration official said.Briefing reporters on the

budgetary proposals for the fiscal 2013, the official said for

certain countries like India the US is now moving from

assistance to trilateral cooperation."Our Feed the Future

Initiative has already started working with India on such a

program similar to one we have with Brazil and

Mozambique," the official said requesting anonymity as

he is not authorised to speak to the press.

SOURCE

NEWSQUEST By Sunayna Jaimini

Post 2G fall,out, PE firms return to realty

The cancellation of 2G licences by the Supreme Court

may have sent shock waves through the telecom sector

but it has brought a unexpected windfall for the fund-

starved realty sector. The ailing sector is witnessing a

sudden surge in interest from many private financing and

private equity(PE) firms, according to PE research

companies and industry trackers.

SOURCE

US working to reduce trade and investment

barriers with India

The United States has said it is working to reduce

investment and trade barriers with India and Brazil, two of

the world's fastest growing markets.The two countries

present American exporters with significant opportunities

and challenges, said Miriam Sapiro, Deputy US Trade

Representative."As with China, we are working hard to

identify, address, and reduce barriers to trade and

investment between the United States and India and

Brazil, two of the world's fastest growing markets," Sapiro

said in her address to the International Alliance of

Theatrical Stage Employees in Atlanta.

SOURCE

Competition Commission of India eases reporting

requirements in M&As

In a bid to make the M& process smoother for India Inc,

the competition regulator has relaxed the reporting

requirements when companies strike a deal.Only deals in

which 25% equity or voting rights is acquired will need to

be reported to the commission, an official in know of the

new rules said.Under the current merger regulations, M&A

and private equity transactions, where greater-than-15%

equity or voting shares are acquired, are subject to a pre-

merger notification under which a company needs to

send a notice to the Competition Commission of India

declaring the same

SOURCE

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PAGE 11 EMPLOYEE NEWSLETTER

INDIA LEGAL UPDATE # FEBRUARY 2012 > >NEWS QUEST | P11

Vodafone tax saga takes a new twist

A public interest litigation (PIL) filed in the Supreme Court,

alleging that the sitting Chief Justice of India (CJI) S.H.

Kapadia had a conflict of interest in the Vodafone tax

case, created a stir on Wednesday, with the petitioner

claiming he was not an agent of the government and

several others terming the petition frivolous. The Chief

Justice‟s bench had ruled against the income-tax (I-T)

department in a landmark verdict on 20 January. The

Times of India reported that the petitioner, advocate

Manohar Lal Sharma, had alleged through a PIL that CJI

Kapadia had not disclosed that his son Hoshnar Kapadia

worked at consultancy firm Ernst and Young (E&Y), which

had advised Vodafone Group Plc on the 2007 Hutchison

Whampoa Ltd deal.The CJI‟s office did not elaborate on

the petition. “Since the matter is sub judice, nothing

further can be said right now. Yes, it has been filed. It is all

there in the newspaper,” said H.K. Juneja, deputy registrar

and private secretary in the CJI‟s office. Mint reviewed

Sharma‟s petition, which makes several allegations,

including against the Union telecom and finance

ministries, Vodafone, Hutchison Whampoa and Analjit

Singh, newly appointed chairman of Vodafone India Ltd.

SOURCE

Sunayna Jaimini

Associate

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PAGE 12 EMPLOYEE NEWSLETTER

India Legal Update is published solely for the interests of clients and associations of Singhania & Partners. This document

is for general guidance only and does not constitute definitive advice. For specific information on recent developments

or particular factual situations, the opinion of legal counsel should be sought.

Copyright © 2011 Singhania & Partners.

Delhi Dipak Rao Mumbai Bidan Chandran Bangalore Shilpa Shah Hyderabad Tara Sarma

INDIA LEGAL UPDATE # FEBRUARY 2012 > >SYNAPSE | P12

SYNAPSE

S&P House, H186, Sector 63, Noida NCR Delhi 201301 (t) +91.120.4631000 (f) +91.120.4631001 (e) [email protected]

B92, 9th Floor, Himalaya House 23, K.G.Marg, New Delhi 110001 (t) +91.11.41531000 (f) +91.11.41531001 (e) [email protected]

123A, 12th Floor, Mittal Court, Nariman Point, Mumbai 400021 (t) +91.22.22885550 (f) +91.22.22885560 (e) [email protected]

401, Prestige Meridian II, M.G.Road, Bangalore 560052 (t) +91.80.41131900 (f) +91.80.41131901 (e) [email protected]

#614, Babukhan Estate, Basheer Bagh, Hyderabad 500001 (t) +91.40.65810662 (f) +91.40.23226219 (e) [email protected]

Hon’ble Supreme Court allows an Arbitration Petition

of S&P on behalf of Denel Pty. Ltd.

An Arbitration Petition for appointment of Arbitrator under

Section 11(4) & (6) of the Arbitration and Conciliation Act, 1996

filed by S&P on behalf of Denel Pty. Ltd. Against Govt of India

has been allowed by the Hon‟ble Supreme Court vide its

judgment and order dated 09.01.2012.The Court while allowing

the petition of Denel, appointed an independent arbitrator,

upholding the contention of Denel that the arbitrator

appointed under the contract was a government employee

and in the facts and circumstances of the case, there is a

likelihood of bias towards the Government of India in the

matter. As such the court terminated the mandate of the

arbitrator appointed by Government of India; purportedly

acting under the agreement.

S&P, representing Kaefer Punj Lloyd Limited in

Arbitration

Representing Kaefer Punj Lloyd Limited, a wholly owned

subsidiary of Punj Lloyd Limited one of Asia's largest

engineering and contracting conglomerates in an arbitration

against Hindustan Petroleum Corporation Limited (HPCL)

Visakha Refinery for recovery of their legitimate dues to Kaefer

Punj Lloyd Limited.

S&P, appointed legal counsel to the Port of Kochi

(officially the Cochin Port)

Appointed as legal counsel in consortia with Infrastructure

Development Corporation (Karnataka) Limited, (iDeCK)to the

Port of Kochi (officially the Cochin Port) a major port on the

Arabian Sea – Indian Ocean sea-route and is one of the largest

ports in India. The project entails Development of General

Cargo terminal at Q8 & Q9 Berths of Cochin Port.