Public Interest Litigation (PIL) in India



*Azeez Nazar Sabri, (LLM (Business Law)


Public Interest litigation ( PIL) means a legal action initiated in a Court of Law for the enforcement of public interest on which the public or class of community is having certain interest, that may affect their legal rights or liability. Thus the PIL is not litigation for enforcement of the individual rights, but for enforcement of the rights of general public or community as whole.  Public Interest Litigation is directly filed in Supreme Court or High Courts by an individual or group of peoples/ NGOs etc.  Article 39 A of the constitution provides that the State shall ensure the operation of the legal system, promote justice on a basis of equal opportunity to all of its citizens. Article 14 provides for equal treatment of all citizens. PIL is a means through which the goal of justice to all, envisaged under article 39 A &14 can be achieved.  

Definition of PIL

Public Interest Litigation has been defined in the Black’s Law Dictionary (6th Edition ) as under:
Public Interest – Something which the public, the community at  large, has some pecuniary interest or some interest by which their legal rights or liabilities are affected. It does not mean anything so narrow as mere curiosity, or as the interests of the particular localities, which may be affected by the matters in question. Interest shared by Citizens generally in affairs of local, state or national government…….

The Council for Public Interest Law set up by the Ford Foundation in USA defined “ Public Interest Litigation” in its report of Public Interest Law, USA, 1976 as follows:
“ Public Interest Law is the name that has recently been given to efforts provide legal representation to previously unrepresented groups and interests.
Supreme Court of India in People’s Union for Democratic Rights & Others Vs. Union of India & Others ( 1982) 3 SCC 235 defined “ Public Interest Litigation” and observed that the “ Public Interest Litigation is a cooperative or collaborative efforts by the petitioner, state of public authority and the judiciary to secure observance of constitutional or basic human rights, benefits and privileged upon poor, downtrodden and vulnerable sections of the society”.
In the recent years the PIL has emerged as the tool to project the rights of the socially/ economically  backward class of society. 

Origin of PIL in India
The origin and evolution of the Public Interest Litigation in India emanated from the realization of constitutional obligation by the judiciary towards the vast sections of the Society.
In Hussainara Khatoon & Others Vs. Home Secretary, State of Bihar ( AIR ) 1979 SC1369, P.N.Bhagwati, J. observed that “today, unfortunate, in our country the poor are priced out of the judicial system with the result that they are losing faith in the capacity of our legal system. The poor in their contact with legal system have always been on the wrong side of the line. They have always come across” law for the poor” rather than “law of the poor”. The law is regarded by them as something mysterious and forbidding always talking something away from them and not as positive and constructive social device for changing the social economic order and improving their life conditions by conferring rights and benefits on them. The result is that the legal system has lost its credibility for the weaker section of the Community. 
In M.C.Mehta & Another Vs. Union of India & Others ( AIR 1987 SC 1086), the Supreme Court of India observed that Article 32 of the Constitution does not merely confer power on this Court to issue direction, order or writ for the enforcement of fundamental rights. Instead, it also lays a constitutional obligation on this court to protect the fundamental rights of the people.  The Court asserted that, in realization of this constitutional obligation, “ it has all incidental and ancillary powers including the power to forge new remedies and fashion new strategies designed to enforce the fundamental rights”. The court realized that because of extreme poverty, a large number of sections cannot approach the court. The fundamental rights have no meaning for them and in order to preserve and protect the fundamental rights of the marginalized section of society by judicial innovation, the courts by judicial innovation and creativity started necessary directions and passing orders in the public interest. 

Who is aggrieved person / Locus Standi 

In Jasbhai Motibhai Desai Vs Roshan Kumar, Haji Bashir Ahmed & Others ( 1976) 1 SCC 671, held that the traditional rule is flexible enough to take in those cases where the applicant has been prejudicially affected by an act or omission of an authority, even though he has no proprietary or even a fiduciary interest in the Subject-Matter. That apart, in exceptional cases  even a stranger or a person who was not a party to the proceedings before the authority, but has a substantial and genuine interest in the subject- matter of the proceedings will be an aggrieved person.
The rule of locus standi was relaxed in Bar Council of Maharashtra v. M.V.Dabholkar & Other ( 1976 scr 306).
In the Mumbai Kamgar Sabha, Bombay Vs. Abdulbhai Faizullabhai & Others, AIR 1976 SC 1455, Supreme Court made conscious efforts to improve the judicial access for the masses by relaxing the traditional rule of “Locus Standi”.
In Municipal Council, Rathlam V. Vardhichand & Others AIR 1980 SC 1622, Supreme Court also relaxed the rule of Locus standi. 
In S.P. Gupta Vs. President of India & Others AIR 1982 SC 149, Justice Bhagwati dismissed the traditional rule of standing, and replaced it with liberalized modern rule.
In J. Jayalalitha V. Government of Tamil Nadu & Other ( 1999)1 SCC53, Supreme Court laid down that public interest ligigation can be filed by any person challenging the misuse or improper use of any public property including the polical party in power for the reason that interest of individuals cannot be placed above or preferred to a larger public interest. 

Misuse of PIL 

Although PIL has become a popular tool to raise the issues related to common people, there are examples where the people have used PIL for their vested interest. To prevent such misuse to the PIL courts have passed strict orders and framed guidelines for PIL. 

In Ashok Kumar Pandey Vs. State of West Bengal ( WP Crl.199/2003), Supreme Court observed that when there is a material to show that a petition styled as Public Interest Litigation is nothing but a camouflage to foster personal disputes, said petition is to be thrown out. Public Interest Litigation, which is naw come to occupy an important field in the administration of law should not be “ Publicity Interest Litigation” or Private Interest Litigation” or Politics Interest Litigation” or a tool in unscrupulous hands to release vendetta and wreck vengeance, as well. There must be real and genuine public Interest Litigation and not merely an adventure or knight errant of poke ones into for a probe. It cannot also be invoked by a person or a body of persons to further his or their personal causes or satisfy his or their personal grudge and enmity. Courts of justice should not be allowed to be polluted by unscrupulous litigants by resorting to the extraordinary jurisdiction. A person acting bonafide and having sufficient interest in the proceeding of public interest litigation will alone have a locus standi and can approach the Court to wipe out violation of fundamental rights and genuine infraction of statutory provisions.
These aspects were also highlighted in The Kazi Lhendup Dorji Vs. Central Bureau of Investigation, 1994 (Supp) 2 SCC 116, Ramjas Foundation Vs. Union of India, (AIR 1993SC 852),K.R.Srinivas Vs. R.M.Premchand ( 1994(6) SCC 620 and S.P.Anad Vs. H.D.Deve Gowda & Others AIR 1997 SC272.

In Janta Dal Vs. H.S.Chowdhary & Others (1992) 4 SCC 305, the Supreme Court cautioned that expanded role of courts in modern “Social” state demand for greater judicial responsibility. The PIL has given new hope of justice-starved millions of people of this country. The court must encourage genuine PIL and discard PIL filed with oblique motives. 

In Sanjeev Bhatnagar Vs. Union of India & Other, AIR 2005 SC 2841, Supreme Court imposed a monetary penalty against an advocate for filing a frivolous and vexatious PIL Petition. 

Email to  : azeez_nazar@rediffmail.com 

No dual rate of Interest in Arbitration Awards



By Azeez Nazar Sabri

In a recent Judgment Supreme Court has held that the rate of the interest for pre and post award period should be uniform. Court further held that there can’t be a uniform rate of interest for INR and EUR components. Supreme court passed this landmark judgment in the matter of Vedanta Ltd. Vs Shenzen Shandong Nuclear Power Construction Co. Ltd ( SSNCPL). ( SLP (Civil) No. 25819 of 2018).

Facts:
On 22nd May, 2018, the Appellant ( Vendanta Ltd) and respondent (SSNPCL)entered into four inter related contracts for construction of 210 MW Co- Generation Power Plant.  Each of four contracts contained an arbitration clause. Certain disputed arose between the parties, which resulted in the termination of the EPC Contracts by SSNCPL and arbitration was invoked by the respondent (SSNPCL).

The arbitral Tribunal passed a detailed Award dated 09.11.2017, wherein the Tribunal awarded interest on the awarded sum @ 9% from the date of institution of the arbitration proceedings provided the awarded amount is paid/ deposited within 120 days of the award.  Tribunal further awarded post award interest @ 15% till dated of realization of awarded amount if amount is not paid within 120 days. Further tribunal awarded a uniform rate of interest on both the components of Award i.e. the amounts payable in INR and EUR.           
Aggrieved by the said Award Appellant (Vedanta) filed objections under section 34 of the Arbitration and Conciliation Act before Delhi High Court. Objections were rejected by High Court vide its order dated 12.02.2008.
Against the said order of single judge, appellant filed an appeal before a Division Bench of Delhi High Court under section 37 of the said Act. The said appeal was also dismissed on 30.08.2018.
Aggrieved by the judgment of the Division Bench, the Appellant filed SLP. 

Judgment/observations
The dual rate of Interest awarded by Arbitral Tribunal seems to be unjustified. The award of a much higher rate of Interest after 120 days is arbitrary, since the Award debtor is entitled to challenge the award within a maximum period of 120 days as provided by section 34( 3) of the 1996 Arbitration Act. If the award- debtor is made liable to pay a higher rate of interest after 120 days, it would foreclose or seriously affect his statutory right to challenge the Award by filing objections under section 34 of the said Act.

The imposition of a higher rate of interest @ 15% post 120 days is exorbitant, from an economic standpoint, and has no co- relation with the prevailing contemporary international rates of interest. The Award- debtor cannot be subject to a penal rates of Interest, either during the period when he is entitled to exercise the statutory right to challenge the Award, before a Court of law, or later. Furthermore, the arbitral tribunal has not given any reason for imposing a 15% rate of interest post 120 days. 

The award of interest @ 9% on the Euro component of the Claim is unjustified and unwarranted. The levy of such a high rate of interest on a claim made in a foreign currency would result in the Claimant being awarded compensation, contrary to the conditions stipulated in the contract. A uniform rate of interest for INR and EUR would therefore not be justified. The rate of 9% interest on the INR component awarded by the Tribunal will remain undisturbed. However, with respect to the EUR component, the award debtor will be liable to pay interest at the LIBOR rate + 3 percentage points prevailing on the date of the Award. Post award period Interest @ 15% stand deleted.   

Email: azeez_nazar@rediffmail.com


Victim can file an appeal against the acquittal of accused



By Azeez Nazar Sabri

In a far reaching and landmark judgment in the matter of Mallikarjun Kodagali ( Dead) represented through Legal Representatives Versus State of Karnataka & Ors. ( Criminal Appeal Nos. 1281-82 of 2018) Supreme Court has held that victim of a crime has right to appeal against the order of acquittal without apply for leave to appeal against the order of acquittal. 

The appellant ( Kodagali- represented by his legal representatives after his death) was victim of an attack on the night of February, 2009. He lodged a First Information Report ( FIR) with the police and after investigations, necessary proceedings were taken before the District and Sessions Judge, Bagalkot against the accused persons under several sections of the Indian Penal Code (IPC).

The District and Session Judge, Bagalkot acquitted the accused by a judgment and order dated 28th October, 2013.Aggrieved by the order of Session Court Kodagali preferred an appeal in the High Court. The appeal was filed under Section 372 of the Cr.P.C, but the same was dismissed as not maintainable by a judgment and order dated 10th June, 2014. It was held by the High Court that proviso to Section 372 of the Cr. P.C  came into the statute book with effect from 31st December,2009 but the incident had occurred well before that date. Therefore, the appeal was not maintainable. 

Kodagali then preferred another appeal in the High Court being Criminal Appeal No. 100119 of 2014. This appeal was filed under the provisions of Section 378( 4) of the Cr.P.C. By a judgment and order dated 04th July, 2014 the High Court held that the appeal was not maintainable. The view taken by the High Court was on a plain reading of Section 378 (4) of the Cr. P.C, namely that the appeal was not filed in a case instituted upon a complaint before a Magistrate. Thereafter, Kodagali filed appeal in the Supreme Court.
The contention of the victim was that he has been left with no remedy against the acquittal of the accused. His submission was that one of the accused is member of legislative assemble and it is for this reason that the State did not challenge the acquittal. 

The substantial questions before Supreme Court were:
1.       Whether a “Victim” as defined in the Cr.P.C. has a right of appeal in view of the proviso to section 372 of the Cr. P.C against an order of acquittal in a case where the alleged offence took place prior to December, 2009 but the order of acquittal was passed by the Trial Court after 31st December, 2009?

2.       Whether the “Victim” must apply for leave to appeal against the order of acquittal?

The answer to first question is YES. The answer to second question is NO. Meaning thereby the Victim can file an appeal against the acquittal of the accused without seeking leave to appeal.    

Email : azeez_nazar@rediffmail.com

In motor vehicle Accident claims,insurance company has to pay first

·         By A N Sabri

On 08th August, 2018, Supreme Court in the matter of SHAMANNA AND ANOTHER  VERSUS THE DIVISIONAL MANAGER, THE ORIENTAL INSURANCE CO. LTD AND ORS. ( Civil Appeal No. 8144 of 2018) upheld the principle of “ pay and recover”  in the motor vehicle accident insurance claims matters.

Brief Facts of the Case:

On 14.04.20108, one Late Mr. Shankareppa Pattar was travelling in a jeep. The jeep was driven negligently due to which door of the jeep suddenly opened and Late Mr. Shankareppa was thrown out of the jeep and sustained grievous injuries and died in the hospital.
The MAC Tribunal awarded compensation of Rs. 3,55,500/- with interest @ 6% per annum from the date of claim petition till realization. Since the driver of the jeep had no valid driving licence at the time of the accident and since there was violation of the terms of the insurance policy, the Tribunal directed the insurance company to pay the compensation to the claimants and granted liberty to the insurance company to recover the same from the owner of the vehicle.

Appeals

Against the order of the Tribunal, Insurance company filed appeal in the High Court of Karnataka at Dharwad Bench . Appeal was also filed by the LRs deceased for enhancement of the compensation.

High Court Judgment  

High Court while relying on in its previous judgment in the case of Oriental Insurance Co. Ltd V K.C.Subramanyam ( ILR 2012 KAR 5241) set aside the award passed by the Tribunal directing the insurance company to pay compensation to the claimants and recover the same from the owner of the vehicle. The High Court held that only owner of the offending vehicle is liable to make payment of the compensation amount awarded by the Tribunal. High Court further enhanced the amount of compensation from Rs. 3,55,500/- to Rs. 4,94,700/- . It was observed by the High Court that where the Supreme Court directed the insurance company to make payment to the claimants and to recover the same from the owner of the vehicle in exercise of its discretionary power was under Article 142 of the Constitution of India and such power is vested only with the Supreme Court and no such power is vested with the High Court.

Judgments discussed:   
1      National Insurance Company Vs. Swaran Singh and others ( 2004) 3 SCC 297.
2      Oriental   Insurance Co. Ltd Vs. Nanjappan and Others ( 2004)13 SCC 224.
3      National insurance Co. Ltd Vs. Bommithi Subbhayamma and others ( 2005) 12 SCC 243.
4      National Insurance Co. Ltd Vs. Laxmi Narain Dhut ( 2007) 3 SCC 700
5      Oriental Insurance Co. Ltd Vs. Brit Mohan and others ( 2007) 7 SCC 56
6      Prem Kumari Vs. Prahlad Dev and others ( 2008) 3 SCC 193.
7      National Insurance Co. Ltd Vs. Parvathneni and another ( 2009) 8 SCC 785

            Findings of Supreme Court
It was held by the Supreme Court that since the reference to the larger bench in Parvathneni case has been disposed of by the keeping the question of law open to be decided in an appropriate case, presently the decision in Swaran Singh case followed in Laxmi Narain Dhut and others hold the field. The award passed by the Tribunal directing the insurance company to the compensation amount awarded to the claimant and thereafter, recover the same from the owner of the vehicle in question, is in accordance with the judgment passed by the Court in Swaran Singh and Laxmi Narain Dhut cases. While so, the High Court ought not to have interfered with the award passed by the Tribunal directing the first respondent ( Insurance Company) to pay the compensation and recovery from the owner of the vehicle.  The impugned judgment of the High Court exonerating the insurance company from its liability and directing the claimants ( Insurance company) to recover the compensation from the owner of the vehicle set aside and the award passed by the Tribunal  restored.
So far as the recovery of the amount from the owner of the vehicle, the insurance company shall recover as held in the decision of Oriental Insurance Co.Ltd V Nanjappan and others case, wherein it was held that for the purpose of recovering the same from insured, the insurer shall not be required to file a suit. It may initiate a proceeding before the concerned Executive Court as if the dispute between the insurer and the owner was subject matter of determination before the Tribunal and the issue is decided against the owner and in favour of the insurer.    
However, the impugned judgment of the High Court insofar as enhancement of the compensation to Rs. 4,94,700/- is affirmed.

Conclusion

Supreme Court relied on Swaran Singh and Laxmi Narain Dhut case, wherein it was held that primarily it is duty of the Insurance Company to pay the compensation to the LR of deceased/ Injured person irrespective of the fact that the driver was not holding the valid licence or there was violation of the terms of the insurance policy. However, the insurance company can recover the said amount from owner. For recovery of the said amount the insurance company needs not the initiate a suit but it can initiate only the execution proceeding before the concerned Executing Court.

( Author can be contacted at azeez_nazar@rediffmail.com

How to draft a Joint Venture Agreement


By A.N.Sabri




Joint Venture is business entity formed by two or more parties to achieve specified objectives without losing their independent identity. Joint Venture is a temporary arrangement which ends upon completion of the specified project/activity.  It is a special vehicle for doing the business activities. In a Joint Venture two or more business entities agreed to participate in a  specified project/ activity on profit and Loss sharing basis in accordance to their share of participation.
           
Joint Ventures are of two types, one is incorporated Joint Venture other is unincorporated Joint Venture. Incorporated joint venture is formed in accordance to the provisions of the companies Act and unincorporated Joint Venture is formed by legally binding agreements between the parties.      
           
In construction Industry Joint Venture a common form of business. Whenever two companies wish to bid for a big constriction project but none of them is eligible /capable to qualify and execute the project on its own, although they have expertise in their respective area, they form a joint Venture so that they can execute the project jointly.
           
Incorporate Joint Venture is a lengthy process so most of the companies opt for the unincorporated joint venture, which is created just by a simple Joint Venture Agreement.

While drafting a joint venture agreement following points should be taken into consideration.

Recitals :

Recitals of an agreement contain the brief introduction of the parties, project and the objective of the Joint Venture. The first Para of joint Venture agreement should mention the date of agreement ( place of execution may be mentioned ) followed by the name of the parties and their authorised signatory and addresses of the parties.

After the name and addresses of the companies a brief description of the companies and their business activities can be mentioned. The name of project/ activities for which parties are forming the joint venture should be specified.





Agreed Terms and Conditions

After the recitals the terms and conditions agreed between the parties should be recorded. It can be started with the following words:

“NOW, THEREFORE, and in consideration of the foregoing premises and other considerations and covenants hereinafter set forth, the Parties hereby agree as follows:”

Following clauses can be incorporated in the joint Venture agreement
           
           
1. Purpose and object of agreement          

The purpose of the agreement should be mentioned clearly to avoid any confusion or ambiguity at later stage. If the parties are forming a Joint Venture for obtaining a construction project the following conditions may be incorporated.

“The Parties shall jointly prepare and submit the tender documents for the Project and if the tender shall be accepted by the client, the Joint Venture shall perform the Project in accordance with the terms and conditions of the Contract. The Joint Venture shall be jointly and severally bound to the client by such acceptance in accordance with the terms of this agreement”.

Similarly the relationship of the parties can be defined in the following words:

“The relationship between the Parties shall be limited to performance of the Contract(s) in accordance with the terms of the Agreement, and nothing in the Agreement shall limit either of the Parties from other activities. Further nothing in this agreement shall be considered/construed as creating any permanent Joint Venture between the parties or establishing an agency, incorporated or unincorporated company or partnership between the parties or limiting the powers or rights of the respective Party to carry on its separate business for its sole benefit and further their common interest in relation to the Project under the terms of this Agreement”.
           
2. Joint Venture Name, office and participating interest

Joint Venture Name and address, name of the lead member and the participating interest of the parties should be specified unambiguously.
           
3. Obligations of the Parties

The obligations of the respective parties should be clearly spelt out. It should be clarified who will bear the cost and other expense of Joint Venture, how the tender will be prepared and submitted, who will lead the negotiations with the client, who will submit the bond and insurances required by the client etc. The responsibility matrix would help to clarify the works to be executed by the respective parties and it would avoid confusion and conflict during the execution of the works.

4.  Organization and management             

How the Joint Venture will be administered should be clearly mentioned. Normally a management board is constituted for administration purpose. This Board consist members from the Joint Venture Partners. It should be specified that how members of board and its chairman will be appointed and how they will take decision.
Similarly the provision for opening of Bank Account and its operation should be made clearly.

5. Liabilities               

Normally the Parties are jointly and severally liable to the Client for all the obligations arising from and in connection with the performance of the Project.

However, the parties can make their inter- se arrangement in case of default of the other party. The defaulting party should indemnify the non-deflating party.  

6. Exclusivity and Confidentiality                                                          

Exclusivity and confidentiality clause can be incorporated to protect the data and information.

7. Governing Law

Governing Law of the Joint Venture Agreement should be specified to avoid any complication in case of disputes.

Similarly the provision for dispute settlement mechanism should also be incorporated. Parties can opt for Arbitration under ICC Rules or any domestic Arbitration rules.

8. Miscellaneous       

Some more Legal clauses regarding Assignment, Publicity, Notices and Validity can also be incorporated.

At last do not forget to write witness clause which can be written as under:   

IN WITNESS WHEREOF, the authorized representatives of the Parties hereto have executed this Agreement on the day, month and year first above written”.

At the end mention name of parties and their authorised signatories and witnesses.

( Contact author at azeez_nazar@rediffmail.com ) 


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