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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
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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PAGE 8 EMPLOYEE NEWSLETTER
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
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]
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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.