Tuesday, July 31, 2018

Temporary Injuction or stay order case laws

"Temporary Injunction"  -  Few important judgments of the Supreme Court of India.

1. Rathnavathi v. Kavita Ganashamdas, (2015) 5 SCC 223
2. Ram Prakash Agarwal v. Gopi Krishan, (2013) 11 SCC 296
3. Lakshmi v. E. Jayaram, (2013) 9 SCC 311
4. Best Sellers Retail (India) (P) Ltd. v. Aditya Birla Nuvo Ltd., (2012) 6 SCC 792
5. Esha Ekta Appartments CHS Ltd. v. Municipal Corpn. of Mumbai, (2012) 4 SCC 689
6. Ranjit Kaur v. Major Harmohinder Singh, (2011) 15 SCC 95 : (2014) 2 SCC
7. Supreme Court Bar Assn. v. B.D. Kaushik, (2011) 13 SCC 774
8. Skyline Education Institute (India) (P) Ltd. v. S.L. Vaswani, (2010) 2 SCC 142
9. Home Care Retail Marts (P) Ltd. v. New Era Fabrics Ltd., (2009) 17 SCC 429
10. Zenit Mataplast (P) Ltd. v. State of Maharashtra, (2009) 10 SCC 388
11. Mandali Ranganna v. T. Ramachandra, (2008) 11 SCC 1
12. D. Dwarakanath Reddy v. Chaitanya Bharathi Educational Society, (2007) 6 SCC 130
13. M. Gurudas v. Rasaranjan, (2006) 8 SCC 367
14. Seema Arshad Zaheer v. Municipal Corpn. of Greater Mumbai, (2006) 5 SCC 282
15. Rajasthan Housing Board v. Krishna Kumari, (2005) 13 SCC 151
16. Fargo Freight Ltd. v. Commodities Exchange Corpn., (2004) 7 SCC 203
17. State of Haryana v. State of Punjab, (2004) 12 SCC 673
18. Vareed Jacob v. Sosamma Geevarghese, (2004) 6 SCC 378,
19. Hardesh Ores (P) Ltd. v. Timblo Minerals (P) Ltd., (2004) 4 SCC 64
20. Haridas Exports v. All India Float Glass Manufacturers’ Assn., (2002) 6 SCC 600
21. Mahendra & Mahendra Paper Mills Ltd. v. Mahindra & Mahindra Ltd., (2002) 2 SCC 147
22. Anand Prasad Agarwalla v. Tarkeshwar Prasad, (2001) 5 SCC 568
23. Uniply Industries Ltd. v. Unicorn Plywood (P) Ltd., (2001) 5 SCC 95
24. A. Venkatasubbiah Naidu v. S. Chellappan, (2000) 7 SCC 695
25. S.M. Dyechem Ltd. v. Cadbury (India) Ltd., (2000) 5 SCC 573
26. Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd., (1999) 7 SCC 1
27. Sree Jain Swetambar Terapanthi Vid (S) v. Phundan Singh, (1999) 2 SCC 377
28. Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1
29. N.R. Dongre v. Whirlpool Corpn., (1996) 5 SCC 714
30. Gujarat Bottling Co. Ltd. v. Coca Cola Co., (1995) 5 SCC 545
31. Mahadeo Savlaram Shelke v. Pune Municipal Corpn.(1995) 3 SCC 33
32. Shiv Kumar Chadha v. Municipal Corpn. of Delhi, (1993) 3 SCC 161
33. Dalpat Kumar v. Prahlad Singh, (1992) 1 SCC 719
34. Cotton Corpn. of India Ltd. v. United Industrial Bank Ltd., (1983) 4 SCC 625

Friday, July 27, 2018

Stages of Cyber Crime (Criminal) Trial in Court

STAGES OF Cyber Crime CRIMINAL TRIAL.

Normally a Cyber Crime Trial has to travel through main stages from the lodging of F.I.R. till its judgment, they are as under :-

1.       FIR       :-           Any person can launch prosecution against the person committing any legal wrong.  A complaint can be lodged orally or reduced in to writing before the police station within whose jurisdiction an offence is committed.  The Police Officer in-charge of the police station considers the complaint and registered

2.         Inquiry and Investigation    :-        An police officer after the receipt of the complaint under section 154 of the Code of Criminal Procedure, and matter is taken up for the investigation.

2-A.     If the Police Officer in-charge does not found any material in the complaint then he can register the complaint under section 155(2) of Code of Criminal Procedure and issues a receipt thereof to the complainant.

3.         Upon registering the F.I.R. and during investigation, a Police Officer can arrest the suspect and took him for remand.  Soon after the arrest the accused has to be produced before the Magistrate within 24 hours from the time of his arrest, for authorizing further detention as contemplated under section 57 of Code of Criminal Procedure.

4.         The Police Officer in-charge can ask for Police Custody of the accused under section 167 of Code of Criminal Procedure if the investigation cannot be completed within 24 hours. (See Sec 57 of Cr.P.C.)

5.         The magistrate considering the application can grant Police Custody to the accused which shall not be more than fifteen days in the whole.

5-A.     If the magistrate does not fit it proper to grant police custody then the accused is taken in Magisterial Custody.  (See Sec 167 of Cr.P.C.)

6.         Soon after the MCR, an accused can apply for grant of Bail, within the provisions of section 436, 437 and 439 of Code of Criminal Procedure.

7.         During the investigation, a police officer in-charge can search, seize the material from the possession of accused, or elsewhere kept by the accused.  ( See Section 27 of Evidence Act )

8.         After the completion of investigation, if the police officer found incriminating substance and prima facie case is made out, then he put up charge sheet against the accused.  If the offence is punishable with death, life or not less than 10 years, then charge sheet is to be filed within 90 days.  Whereas the offence is punishable less than 10 years then charge sheet is to be filed within 60 days.  ( See Section 167 (2) (a) (i) and (ii) of Cr.P.C.

8-A.     Upon receipt of charge sheet under section 173 of Code of Criminal Procedure, the court can either accept the charge sheet and put the accused to trial or reject the charge sheet and discharge the accused.

8-B.     If upon the completion of investigation, the police officer does not found any prima facie case, then he can file a final report requesting a discharge of accused.    

8-C.    Upon receipt of the final report, the magistrate can either direct the police officer to re-investigate and file report or can issue notice to the complainant for hearing upon the final report requesting the discharge of accused.

8-D.     If the complainant does not satisfy with the final report requesting discharge of accused, he can request for treating the same as protest petition and try the accused independently.

9.         On acceptance of charge sheet, the accused has to take necessary bail from the court and mater is posted for plea or charge as the case may be.  Whenever the offence is punishable with two years of punishment, then such cases are called as summons case and tried as summary trial within the exception of section 260 of Cr.P.C. and the rest of the matters are tried as summons case. (See Section 239, 240 and 251 of Cr.P.C.)

10.       On complying section 251 or 240 as the case may be, the matter is posted for evidence of the prosecution witness.  (See section 242 and 254 of Cr.P.C.)

11.       Sometimes prior to commencement of evidence of prosecution the prosecution issues notice under section 294 of Cr.P.C. to admit documents to the accused.  By this way the evidence of the witnesses for which the document is admitted is curtailed during the trial.

12.       Whenever the evidence is to be recorded, the court has to record the evidence as provided under section 274 of Cr.P.C. for summons case and section 275 of Cr.P.C. for warrant case.    For summary trial u/s 260 of Cr.P.C. the evidence is recorded as provided under section 263 of Cr.P.C.

13.       After recording the evidence, the matter is posted for statement of accused under section 313 of Cr.P.C, wherein the incriminating evidence brought against the accused is explained to the accused.

14.       Thereafter the matter is posted for evidence of the defense if any.  If the accused does not desire to adduce his own evidence or any other evidence in his defense then matter is posted for Arguments. (See Section 314 of Cr.P.C. for arguments )

15.       After the completion of arguments the matter is posted for judgment.  If there is a judgment of acquittal in summons case then it is to be given under section 255(1) of Cr.P.C. and conviction under section 255(2) of Cr.P.C.

16.       Similarly the judgment of acquittal in warrant cases are given under section 248(1) of Cr.P.C. and conviction under section 248(2) of Cr.P.C.

17.       If the conviction is given, then the copy of the judgment is to be provided to the accused forthwith free of cost.

18.       In case of sentence the magistrate is empowered to pass the sentence up to three years and fine not exceeding Rs. 10,000/-.  Similarly the CJM can pass sentence up to 7 years.  ( see Section 29 of Cr.P.C.)

19.       The sentence of imprisonment in default of payment of fine can be given not exceeding 1/4th of the sentence which magistrate can inflict as punishment.  (See Section 30 of Cr.P.C.)

20.       The magistrate can also award compensation to the complainant while recording the judgment of conviction.  ( See Section 357(1) and 357 (2) of Cr.P.C.)

21.       If the accused has undergone any detention during the period of investigation and trial then while convicting him, a set off can be given under section 428 of Cr.P.C.)

22.       Upon conviction, accused can request for suspension of sentence under section 389 (3) of Cr.P.C.

23.       In view of section 437-A of Cr.P.C. accused has to submit bail bonds to appear before the next appellate court.

Sunday, April 22, 2018

What is a Fraud as per law in India

What’s a Fraud according to Law in India

Landmark Judgment of supreme court on Fraud
By "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.

10. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage.

11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 6805, 6803-6804 of 2013 and 8627 of 2014

Decided On: 17.04.2017

 Delhi Development Authority and Ors. Vs. Bankmens Co-operative Group Housing Society Ltd. and Ors.

Hon'ble Judges/Coram:
Pinaki Chandra Ghose and Deepak Gupta, JJ.
Citation: (2017) 7 SCC 636

1. These appeals are being disposed of by a common judgment since common issues of fact and law are involved.

2. We may first refer to the facts of Civil Appeal No. 6805 of 2013 relating to Bankmens Co-operative Group Housing Society (hereinafter referred to as the 'Bankmens CGHS'). Some employees of the State Bank of India resolved to form a Co-operative Group Housing Society, namely Bankmens CGHS Ltd., on 06.10.1983 under the Chairmanship of one Deepak Khanna. The Society was registered with one Shri R.K. Mangla, as its Secretary. The Society had given a list of 74 promoter members. Correspondence was exchanged between the Bankmens CGHS, Registrar of Co-operative Societies (hereinafter referred to as 'RCS') and the Delhi Development Authority (hereinafter referred to as 'DDA'). The Bankmens CGHS did not comply with various directions of the RCS and it was placed under liquidation on 30.03.1992. Though Liquidator was appointed, he did not take over the records of the Bankmens CGHS.

3. Some time between 1999-2000, almost after 16-17 years the Bankmens CGHS had been formed, and 7 years after it was placed under liquidation, an application for revival of the Society was filed by one Rajan Chopra. Admittedly he was not one of the original promoters of the Society. Though initially, objections were raised to the revival of the Society, the Society was finally revived on 13.07.2000. On 22.08.2000, a list of 74 members of the Bankmens CGHS was approved for allotment of land and on 02.11.2001, the Appellant DDA issued provisional Letter of Allotment of land to the Society. Though the land was allotted yet the same was not handed over to the Society. Aggrieved by this, the Bankmens CGHS filed a Writ Petition No. 1521 of 2004 before the Delhi High Court in 2004 and on 31.05.2004, this petition was disposed of with a direction that land be provided to the Bankmens CGHS. Against this, the DDA filed an LPA No. 912 of 2004 which was disposed of on 08.02.2006, directing that the verification of members be undertaken either by the DDA or by the RCS and, thereafter, possession of land be handed over to the Society within a period of two months subject to making payment as demanded by the DDA.

4. The case of the Appellant is that when it requested the RCS to verify the names of the members, the reply given was that all the records of the Bankmens CGHS were with the Central Bureau of Investigation (hereinafter referred to as the 'CBI') pursuant to the directions issued by the High Court of Delhi in Writ Petition No. 10066 of 2004, filed by one Yogi Raj Krishna Bankmens Co-operative Group Housing Society Ltd. and Ors. Thereafter, DDA wrote to the CBI but the CBI did not provide the record and replied that it was the duty of the RCS to verify the names of the members. In the year 2012, the Bankmens CGHS filed another Writ Petition No. 3546 of 2012 praying for directions to the DDA to handover the vacant possession of plot pursuant to the directions in LPA No. 912 of 2004 decided on 08.02.2006. The Writ Petition was disposed of on 23.07.2012. The Delhi High Court directed the DDA to process the case of the Bankmens CGHS for possession of plot within a period of one month. This order is under challenge in Civil Appeal No. 6805 of 2013 @ SLP (C) No. 18747 of 2013.

5. The facts of Safdarjung Co-operative Group Housing Society (hereinafter referred to as 'Safdarjung CGHS'), are similar. The Safdarjung CGHS was registered with the RCS on 18.11.1983. One Shri Sudarshan Tandon moved an application on 09.08.1983 for registration of the Safdarjung CGHS showing that it had 83 promoter members. The Society wanted to change the names of its members but this action was not approved by the RCS and finally on 06.11.1990 an order was passed for liquidating the Safdarjung CGHS. Some of the records of the Safdarjung CGHS came into possession of one Mahanand Sharma who was not even a member of the Safdarjung CGHS. On 01.12.1998, an application was moved by Mahanand Sharma for revival of the Safdarjung CGHS. Thereafter the Safdarjung CGHS was revived on 26.04.1999. On 24.11.1999 the Office of the RCS recommended the name of Safdarjung CGHS for allotment of land. After the Society was revived, like in the case of Bankmens CGHS, a plot of land was provisionally allotted to Safdarjung CGHS. Thereafter, Safdarjung CGHS filed a Writ Petition No. 1990 of 2004, which was disposed of along with the case of Bankmens CGHS (WP No. 1521 of 2004). Aggrieved by this order, an LPA No. 904 of 2004 was filed by the DDA in this case also and identical order was passed for verification of the members. Thereafter, similar correspondence took place between the DDA, Office of the RCS and the CBI.

6. On 03.03.2011, Safdarjung CGHS filed a Writ Petition (C) No. 13298 of 2009 in the High Court of Delhi claiming that though it had paid the amount demanded to the DDA, the plot of land in Dhirpur had not been handed over on account of the CBI case pending against the office bearers of the Society. The High Court directed that the RCS should initiate fresh enquiry into the list of members submitted by the Safdarjung CGHS and it may also rely upon the investigation undertaken by the CBI. On 14.09.2011 enquiry report was submitted and it was found that the list of members was not authentic. Thereafter, the RCS on 10.01.2012 passed an order that the names of the members of the Respondent Safdarjung CGHS cannot be recommended to the DDA for allotment of land.

7. Aggrieved by the aforesaid order of the RCS on 28.01.2012, Safdarjung CGHS filed Writ Petition (C) No. 1168 of 2012 claiming that the Society was a genuine Society and the Writ Petition was disposed of on 27.02.2012 on the ground that the case of the Safdarjung CGHS was identical to the case of Lords Cooperative Group Housing Society v. Registrar, Cooperative Societies and Ors., which was disposed of on 23.05.2011. The RCS was directed to take fresh decision in the matter. Thereafter, on 02.05.2012, the RCS recommended the names of the members of Safdarjung CGHS to the DDA. After the decision of the High Court in Bankmens CGHS's case on 23.07.2012, the Safdarjung CGHS filed Writ Petition (C) No. 5109 of 2012 claiming relief of physical possession of the allotted plot. The High Court disposed of the petition upon the statement of the counsel for DDA that the plot would be handed over to the Society within a period 15 days. It is not disputed that possession of this plot was actually handed over to the Safdarjung CGHS pursuant to this order. Both the order dated 27.02.2012 passed in W.P.(C) No. 1168 of 2012 and order dated 22.08.2012 passed in W.P.(C) No. 5109 of 2012 have been challenged in C.A. Nos. 6803-6804 of 2013 @ SLP (C) Nos. 3268-3269 of 2013.

8. Another important fact which is relevant for decision of these cases is that the DDA had fixed a cut-off date of 31.10.2003 for allotment of land to the short-listed societies. One Yogi Raj Krishna CGHS filed a Writ Petition No. 10066 of 2004 alleging that a large number of bogus societies which were either non-existent or defunct, or otherwise were not eligible for allotment of land had been included in the list of societies after the cut-off date. In this Writ Petition a Division Bench of the Delhi High Court in its order dated 25.08.2008 observed as follows:

3. During the pendency of proceedings and on consideration of the material on record, it was felt that the matter required further probe and consideration on account of 'Builders' having taken over Cooperative Societies. It was observed in order dated 22.11.2004, that societies were being sold and bought by builders in Delhi. Court expressed its deep concern over the matter and called for Vice Chairman, DDA and Registrar of Cooperative Societies to be present in person in court. Pursuant to said order Mr. M. Gupta, Vice Chairman, DDA and Mr. S. Gopal Sharma, Registrar Cooperative Societies, appeared in person in court and they informed that authorities were aware that after allotment of land to Cooperative Housing Societies in certain cases, the society as a whole is purchased by Builders and thereafter members are changed on the basis of en masse resignations, expulsions and new members inducted by charging premium at market rates, taking advantage of loopholes in the Rules and Regulations. The Court observed the need for formulation of a comprehensive policy with regard to allotment of land to Cooperative Societies taking into account the above factors. Union of India was also issued notice and has filed its affidavit. Learned Additional Solicitor General pointed out that an earnest attempt was being made to see that land allotted to societies was not hijacked by the builder mafia in Delhi and certain suggestions were placed on record.

4. On 05.04.2005, DDA was directed to file an affidavit pertaining to the categorization of societies i.e. list of those societies which underwent liquidation and now were seeking revival and allotment of land and the list of genuine societies which had approved list of members till 31.10.2003, from the office of Registrar Cooperative Societies, with their membership duly verified.

5. Considering the enormous amount of money that had been pumped in and invested by the influential Builder mafia and other vested interests, collusion and complicity of the staff and officers of RCS and others to hijack the societies, Director CBI was directed to constitute a special investigation team headed by an officer not below the rank of DIG with adequate staff to investigate the whole matter. On 31.08.2005, counsel appearing for CBI informed about outcome of preliminary investigation. CBI was directed to file a detailed affidavit in this regard. On 03.10.2005 CBI filed status report wherein it pointed out that out of 135 societies, 19 societies appeared to be genuine, the names of said societies had been given in Annexure A to the report. On the same date the names of those societies were ordered to be deleted from the list of 135 societies which were directed to be scanned by the CBI. Registrar Cooperative Societies was directed to verify the list of members in accordance with law.

6. During the pendency of proceedings, this Court further noted that many societies had been allotted land after the year 2000. It was noted that as the price of the land started soaring in Delhi after the year 2000, this spurt in land prices led to unholy nexus between builders and powerful persons in various authorities. Societies which were hitherto defunct or had lost interest in allotment for one reason or another were sought to be revived by the office of the Registrar of Cooperative Societies and thereafter land was demanded from DDA on the basis of such recommendation. The Court ordered DDA and Registrar of Cooperative Societies to give details of all the societies which were allotted land after the year 2000 and also directed them to produce the relevant files in court along with recommendations of allotment to DDA. CBI was directed to look into those allotments and also with regard to the members who had been allotted land. Mr. K.C. Mittal, Advocate was appointed Amicus Curiae to assist the Court.

The High Court observed that since the builder mafia was very influential and there was collusion between the builder mafia and officers of the RCS, the investigation should be carried on by the CBI. The Director, CBI submitted his report pointing out that out of the 135 societies only 19 appeared to be genuine. The CBI both in the case of Bankmens CGHS and Safdarjung CGHS filed chargesheet against some of the office bearers of these two Societies and also officials of the RCS and the RCS himself, alleging that the Societies were revived in an illegal manner.

9. As far as Bankmens CGHS is concerned the charges are that the revival application was filed by one Rajan Chopra by hatching a criminal conspiracy along with officials of RCS and Shri R.K. Srivastava, Registrar of the RCS, to fabricate and manufacture false documents to revive the Bankmens CGHS. The address of the Society was changed. It is also alleged that Rajan Chopra submitted a forged 'No Objection Certificate' dated 29.12.1999 purported to have been issued by Shri Vipin Gandotra, Proprietor of M/s. VG & Co., in this regard. Initially, when the official of the RCS went to the address he found that no such Society was existing at the address and, therefore, he recommended that the Society should not be revived. However, another Dealing Assistant prepared a false note which was forwarded by other officials of the RCS at the instance of the then RCS R.K. Srivastava and the Society was revived. The case of the CBI is that though a fresh list of 74 members was given, not even one of these members was from the original list of 74 members when the Society was incorporated in the year 1983. The case of the CBI further is that 35% of the cost of the land had to be paid by the Society to the Appellant DDA. This money, according to the CBI was not paid by the enrolled members of the Society but a group of builders comprising of Accused S.P. Saxena and Sandeep Sahni who had taken over control of the Society and paid a sum of Rs. 67,38,800/- from their joint S.B. Account No. 18699 with the Central Bank of India, South Extension, Part-II, New Delhi Branch. Thus the case of the CBI is that this Society was illegally revived. It would be pertinent to mention here that after the filing of SLP (C)...CC No. 2696 of 2013 (CA No. 6805 of 2013 @ SLP (C) No. 18747/2013), this Court passed an order on 29.01.2013 directing the Appellant DDA to file an additional affidavit. In this affidavit it has been mentioned that the Bankmens CGHS was registered at 21, Inder Enclave, Rohtak Road, New Delhi, with 65 promoter members but on 31.07.1985, Shri R.K. Mangla, requested the RCS to approve a list of 74 members. Some issues were raised by the RCS but the Bankmens CGHS did not respond to the letter of the RCS and, thereafter, the Society was placed under liquidation. When the Accused Rajan Chopra filed an application for revival of the Society on 11.11.1999 the address of the Society was changed to 44/7-B, Regal Building, Connaught Place, New Delhi. The allegation is that the Society was revived fraudulently and that the names of the members of the Bankmens Society as in 1993 were never forwarded to the RCS at the time of revival of the Society and fresh members were inducted. Even the list of members pertaining to the year 1999 is totally different from the list of members as on 31.03.2003 and this list has been changed substantially on 31.03.2011. There were many resignations and new additions of new members. None of the original members of the Society whose names were listed in the list that was forwarded to the DDA on 22.08.2000, feature in the list of members of the Bankmens Society as on 31.03.2011. The entire membership list is totally different. Even out of the list of 74 members as given on 31.03.2003 there are only 13 members in the list of members as on 31.03.2011 and the other 61 members were totally new.

10. As far as the membership of Safdarjung CGHS is concerned, the facts are very similar. It would be pertinent to refer to the inquiry report in respect of this Society filed in the High Court of Delhi in W.P.(C) No. 13298 of 2009. In the enquiry report it was observed that the Society was initially formed on 18.11.1983 with 83 members. This Society was wound up in the year 1990 and as such there was virtually no society which could be revived. Be that as it may, the next list of members is of the year 1999. This list was submitted by one Mahanand Sharma. It would be pertinent to mention that Mahanand Sharma was not a member of the Society in 1983. According to this report as also as per the charge-sheet submitted by the CBI Mahanand Sharma has, in fact, forged the signatures of original members and has also forged the signatures of many members. During the inquiry by the CBI it was found that those members who were shown to have resigned from the Safdarjung CGHS had denied their signatures on the resignation letters. Therefore, the list pertaining to the year 1999 itself was a forged and a fake list.

11. In this case there is another list of members of the year 2009. This list came to the knowledge of the authorities only when it was filed along with W.P.(C) No. 13298 of 2009 and this list was not validated by the RCS at any point of time. This list is not only different from the list of 1983 but also very different from the list of 1999. New members could have been enrolled only after the resignation of old members but intimation of resignation of a member has to be sent to the Office of RCS. The case of the CBI is that the resignations of most of the members are forged. As pointed out above none of the members of the 1983 list are shown as members in the year 1999. In this case also the address of the Society was changed from SDA Shopping Complex to Jagriti Enclave. In this case when the Secretary of the so-called Safdarjung CGHS moved the RCS for approval of the new list of members on 16.12.1999, a noting was made that the Secretary of the Society be asked to give all the records relating to the resignations and enrollments. It was also noted that the address of the Society was changed more than twice in a year. No response was received from the Society and hence, according to this report the membership list was totally fraudulent. Even with regard to the members shown in the list of 2009, the report found various anomalies in the same. Therefore, the Registrar refused to accept the list of 2009 and refused to recommend the name of the Safdarjung CGHS for allotment of land. This order was challenged by the Safdarjung CGHS by way of a writ petition and the High Court while disposing of the writ petition held that this case was similar to the Writ Petition (C) No. 2441 of 2011, Lords Co-operative Group Housing Society v. Registrar, Cooperative Society and Ors. decided on 23.05.2011. It was argued before the High Court that in the case of Lords CGHS the land had not only been allotted but possession of the land had also been taken, flats had also been constructed and they were ready for allotment. The High Court rejected this plea on the following grounds:

...... We, however, find that the ratio of the said judgment is that where such societies had been permitted to be revived, contributions made by the members whether towards land or cost of flat, the matter should not be re-agitated. The verification had to be carried out by the DDA at the time of allotment of land over which there is no dispute. The allotment is still subsisting. The impugned order 10.01.2012 does not even note this judgment delivered by us and proceeds on the basis as if the allotments are yet to be made. In fact the necessary recommendation has to be made to the DDA qua the eligible persons and not that the land allotted to the society itself stand scrapped. The allotment of land is a function of the DDA....

This judgment is under challenge in W.P. No. 13298 of 2009.

12. Shri Ranjit Kumar, learned Solicitor General appearing for the DDA submits that the High Court fell in error in relying upon the judgment rendered in Lords CGHS case (supra). His submission is that the factual situation in that case was entirely different. In Lords CGHS case (supra) not only had the land been allotted, possession of the land had also been handed over to the Society, construction of the building was completed and the flats were ready. It was in these circumstances that the Delhi High Court held that the members of the Society were entitled to get possession of the flats. No doubt, the decision of the Delhi High Court, in Lords CGHS case (supra) was upheld by this Court but while upholding the judgment this Court observed that in view of the fact that construction was complete and flats were ready for allotment, the members of the Society should not be denied possession of the same. Shri Ranjit Kumar has drawn our attention to the various orders passed by this Court in different cases and a bare perusal of these orders show that this Court did not go into the merits as to whether the Society could have been legally revived or not, but either disposed of the SLPs by a non-speaking order or rejected the same on the ground that construction was complete. It is further urged by Shri Ranjit Kumar that the revival of the Societies was a fraudulent act and he submits that fraud vitiates all decisions and in this regard he made reference to the judgment of this Court in Bhaurao Dagdu Paralkar v. State of Maharashtra MANU/SC/0495/2005 : (2005) 7 SCC 605, relevant portions of which read as follows:

9. By "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from ill will towards the other is immaterial. The expression "fraud" involves two elements, deceit and injury to the person deceived. Injury is something other than economic loss, that is, deprivation of property, whether movable or immovable or of money and it will include any harm whatever caused to any person in body, mind, reputation or such others. In short, it is a non-economic or non-pecuniary loss. A benefit or advantage to the deceiver, will almost always cause loss or detriment to the deceived. Even in those rare cases where there is a benefit or advantage to the deceiver, but no corresponding loss to the deceived, the second condition is satisfied.

10. A "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage.

11. "Fraud" as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata.

13. We have heard learned Counsel for the Respondents and they have also filed their written submissions. It would be pertinent to mention that counsel for the Respondents have not countered the submission of the learned Solicitor General that the revival of the Societies was illegal and fraudulent. The main submission is that the new members were validly granted membership in the Bankmens CGHS. They are not at fault and hence they should not be made to suffer. It is also urged that the allegation that Rs. 67,38,800/- was paid out of the funds of builders is incorrect and, in fact, this amount was paid out of the funds of the Society.

14. In Safdarjung CGHS additional grounds have been taken that the DDA had not, in fact, challenged the orders dated 27.02.2012 and 22.08.2012 but only after the land which was the subject matter of dispute in Bankmens CGHS case was illegally given to some third party, it was felt by officials of the DDA that contempt proceedings may be initiated against them and, therefore, appeal was filed in Safdarjung CGHS case also. Again on merits all that has been stated is that after revival in the year 1999, the membership is genuine and bonafide and that the genuine members cannot be denied what is rightfully due to them.

15. We have carefully considered the arguments of both the sides. As pointed out by the Delhi High Court in Yogi Raj Krishna CGHS's case (supra) it is more than apparent that the builder mafia was instrumental in getting the societies revived. The CBI conducted investigation on the directions of the Delhi High Court. After investigation triable cases have been made out against the office bearers of both Bankmens CGHS and Safdarjung CGHS and some officials of the RCS. In Safdarjung CGHS's case an inquiry was conducted on the directions given by the Delhi High Court and in that inquiry it was found that the memberships were not genuine. But that report has been brushed aside by the High Court, only on the ground that this case is covered by Lords CGHS's case. We are in agreement with the learned Solicitor General that the facts of these cases are totally different from the facts of the Lords CGHS's case. In these cases even though provisional allotment was made more than 15 years back, yet the plot of land was never handed over to the Bankmens CGHS, and in the case of Safdarjung CGHS possession of land was handed over only after the intervention of the Delhi High Court in the year 2012 and the construction has not even started. Therefore, these two cases stand on a totally different footing.

16. As repeatedly held by this Court when an action is based on fraud the same cannot withstand the scrutiny of law. The revival of these Societies is mired in controversy. When we talk of revival it would normally mean that the society is being revived by its original members. As far as these two cases are concerned the move for revival was started by persons who were not even members or promoters of the original society. The revival of societies was funded by the builders. The original members have all vanished into thin air. There is no explanation as to how they resigned and who accepted their resignations. There is nothing on record to show how Rajan Chopra, in case of Bankmens CGHS and Mahanand Sharma, in case of Safdarjung CGHS were entitled to file the application for revival. We also cannot lose sight of the fact that both the Societies were put under liquidation because they could not furnish some information to the Office of the RCS. There is not even a plea that when the revival was done the RCS was satisfied that the reasons for which the Societies were liquidated no longer existed. It is also obvious that memberships kept changing and almost all the members of these two Societies are persons who were granted membership after the year 2003, i.e. after the cut-off date referred to in Yogi Raj Krishna CGHS's case. We are, therefore, clearly of the view that the very revival of the Societies is illegal and that when the foundation falls the edifice which has been developed on the foundation must go.

17. The argument made in Safdarjung CGHS's case is that the DDA had acquiesced to the orders passed by the Delhi High Court. This argument is without merit. The delay in filing the petition was condoned and now the Respondents cannot be allowed to urge that the appeal is not maintainable. We may make it clear that we have not gone into certain arguments of the learned Solicitor General where he had referred to the charge sheets in both the cases because we felt that we should not make any comment that would have bearing on the criminal trial. We further clarify that any observations made herein have been made only with a view to decide these cases and will have no impact on the criminal cases.

18. Another argument raised is that verification of the members is only to be done when the plots are to be allotted and such verification is not required at the time when the land is to be allotted to the Society. We are not at all in agreement with this submission. If this submission is accepted, in every case the DDA will be presented with a fait accompli and the situation as prevailing in Lords CGHS's case would come into play. In a case like the present one where the very revival of the society or the creation thereof is wholly illegal, verification of the members must be done even at the stage before the land is allotted to the society.

19. In view of the above discussion we are clearly of the view that the revival of the Societies was illegal. It was manipulated by persons who had no connection with the Societies. We are prima facie of the view that the builder mafia had a big hand in getting the Societies revived. Hence we hold that the very revival of the Societies is illegal and the memberships are not genuine and hence the appeals are allowed. However, there may be some members of the Societies who must have been duped by the promoters. Therefore, we direct the DDA to refund the money deposited to the Societies along with interest @10% p.a. with effect from the date when the money was deposited with the DDA. The amount be paid within 2 months from today. The Societies shall in turn ensure that within 4 weeks thereafter the amount deposited by the members is returned to them along with the interest aforesaid. This will alleviate the hardship of genuine members.

20. Accordingly, Civil Appeal Nos. 6805 of 2013 and 6803-6804 of 2013 filed by the DDA are allowed and the judgments/orders of the Delhi High Court 23.07.2012, 27.02.2012 & 22.08.2012 are set aside and the Writ Petition (C) Nos. 3546, 1168 and 5109 of 2012 filed by Bankmens CGHS and Safdarjung CGHS are dismissed with the aforesaid terms.

CIVIL APPEAL No. 8627 of 2014

21. This appeal is directed against the interim order of the Delhi High Court whereby the High Court directed that the membership of the Society be got verified. In view of what has been discussed above, there can be no ken of doubt that verification of the members must be done to ensure that the members of the society are genuine members. Hence Civil Appeal No. 8627 of 2014 is dismissed.

Courts in India

Courts in India {kinds & hierarchy of courts in brief}

"But there is one human institution that makes a pauper the equal of a Rockefeller, the stupid man the equal of an Einstein, and the ignorant man the equal of any college president. That institution, gentlemen, is a COURT.”             -Harper Lee, To Kill a Mockingbird.

The judiciary in India have wide and immense scope and role in the Justice administration system.Though the constitution of India provides the federal structure in political administration i.e the center and state as a political unit but in respect to the judiciary or the court system the judiciary in India is uniform and in pyramidical or hierarchical manner to administer both Union and State laws. The Hon’ble Supreme Court of India in the highest/top level and the court of Munsif/Civil Judge Junior Division in the lowest/bottom level. The Supreme Court of India is the highest court of appeal and have been entrusted with the widest jurisdiction. The constitution and the statutes provides the specific jurisdiction and the constitution of every court in India. The literal term and the meaning of the judiciary refers to the word “court”. Furthermore the term “judiciary” is the emotional attachment and denotes to the organ of the government but in the practical and formal sense  for the  same organ/institution term “court” is being used. Therefore I hereby give/illustrate the meaning and the definition of the word “court” as per the definition given in the different dictionary, statutes and in the judicial decisions.




A. The definitions of the Court:-

The Webster’s Dictionary defines the term “court” as the “Court” may mean a principle Court of original jurisdiction and as is ordinarily understood as a place “where justice is judicially administered.”(The Law Lexicon-Webster’s Dictionary, 1990 Edn. Page 2).



The Oxford Dictionary defines the term court as “a tribunal presided over by a judge, judges, or a magistrate in civil and criminal cases”


The Oxford Advanced Learner's Dictionary defines the term “court”as “the place where legal trials take place and where crimes, etc. are judged the civil/criminal courts”


         
The Black’s Dictionary  gives the several definitions of the single word “court” and one of them is as “in practical sense the court means an organ of the government, belonging to the judicial department, whose function is the application of the laws to controversies brought before it and the public administration of justice ( Black's Law Dictionary Free Online Legal Dictionary 2nd Ed.).



In the case of Brumley v. State, 20 Ark. 77. It was held as “A court may be more particularly described as an organized body with defined powers, meeting at certain times and places for the hearing and decision of causes and other matters brought before it. and aided in this, its proper business, by its proper officers, viz., attorneys and counsel to present and manage the business, clerics to record and attest its acts and decisions and ministerial officers to execute its commands, and secure due order in its proceedings.”



According to sec. 3 of the Indian Evidence Act, 1872 (Act No. I of 1872) the word “Court” has been defined as “Court” includes all Judges and Magistrates and all persons, except arbitrators, legally authorized to take evidence.



According to sec. 20 of the Indian Penal Code 1860 ( Act No. 45 of 1860) the   term court has been defined as “Court of Justice”  which denote a Judge who is empowered by law to act judicially alone or a body of Judges which is empowered by law to act judicially as a body, when such Judge or body of Judges is acting judicially.

 

In the word of the Hon’ble Justice Gajendragadkar, “ The expression “a court” in the technical sense is a Tribunal constituted by the State as a part of the ordinary hierarchy of Courts which are invested with the State’s inherent judicial powers. The Tribunal as distinguished from the Court exercises, judicial powers and decides matters brought before it judicially, quasi-judicially, but it does not constitute a Court in a technical sense (Engineering Mazdoor Sabha Vs. Hind Cycles, AIR 1963 SC 874 at p.878 ).



According to the Legal Giant Sir Dinshaw Fardunji Mulla “ The word 'court' is a generic term and embraces a judge. A court is an agency created by the sovereign for the purpose of administering justice judicially. It is a tribunal presided over by judge(s) on whom are conferred certain judicial powers for administering justice  in accordance with law. The court is said to have  assembled for administering justice when judge(s) take a seat in the court. A tribunal may be termed as a court if it has all the trappings of a court. Every court may be a tribunal but every tribunal need not necessarily be a Court. Once the essential features of “court” are satisfied, then it will have to be termed as a “court” (Mulla, “ The Code of Civil Procedure (Abridged) ” p. 19, 16th Edition).





B. Kinds of Courts:-

Now let me discuss about the kinds/hierarchy of the court existing/prevalent in India which are as follows:-

1. The Supreme Court.

2. The High Courts in the state.

3. The Subordinate courts.
 
 Both the Supreme Court and the High Courts in the state are prescribed and protected by the Constitution and the constitution itself prescribes the each and every provisions relating to the compositions, jurisdictions and others provisions relating to the powers and functions of the Supreme Court and the High Courts  and though the Constitution prescribes the provisions relating to the subordinate courts but the constitution does not prescribe all the provisions relating to the subordinate courts with regards to its constitutions, kinds, hierarchy and the jurisdiction. It may be because it was not possible on the part of the framers of the constitution during the drafting of the same to give all the details of the same in the Constitution. It is neither feasible nor practicable. In fact the details provisions relating to the subordinate courts is prescribed by the different statutes both in the civil and criminal nature. The subordinate courts have been divided in civil and criminal courts.



Now I hereby would like to draw a lineal divisions and classifications in between the civil and criminal courts which are as:-

                                 

(i) The Subordinate civil courts:-


There may be the different statutes in the different states in India providing the provisions for the subordinate civil courts with regards to its constitution, kinds, hierarchy, jurisdictions etc.  Besides then the Code of Civil Procedure 1908  (Act No. V of 1908)  in section 3 there are or may be the separate statutes providing the provisions relating to civil courts with regards to its constitution, kinds, hierarchy, jurisdictions etc. But in the context of the state of West Bengal there are  two age old Acts  and  one new Act passed by the  Lieutenant-Governor of Bengal, [Lieutenant-Governor of Bengal, the Lieutenant-Governor of the North-Western Provinces and the Chief Commissioner of Assam,] which provides the constitution, kinds, hierarchy, jurisdiction etc. of the Civil Courts. These are three in numbers viz.

 (a) The Bengal, Agra and Assam Civil Court Act, 1887 ( Act No. XII of   1887);
 (b) The Presidency Small Cause Courts Act, 1882 (Act No. XV of 1882);
 (c) The City Civil Court Act, 1953 ( West Bengal Act XXI of 1953);

 The above two Acts i.e The Bengal, Agra and Assam Civil Court Act, 1887 ( Act No. XII of 1887) and The Presidency Small Cause Courts Act, 1882 (Act No. XV of 1882) was enacted during the British period in India and these are still existing and operating and have been proved as good laws. The purpose behind the enactment of The Bengal, Agra and Assam Civil Court Act, 1887 ( Act No. XII of 1887) was to consolidate and amend the laws relating to Civil Courts in Bengal, [the North-Western Provinces and Assam.]. There are in total 40 sections in the Act and it have been divided in seven chapters. The Chapter II from sec. 3 to sec. 17 deals with provisions of constitution of Civil Courts. Sec. 3 deals with the classes of courts and it lays down as there shall be the following classes of Civil Courts under this Act, namely:-

1. The Court of the District Judge;
2. The Court of the Additional Judge;
3. The Court of the Assistant District Judge; and
4. The Court of the Munsif.

               

Hence by the above classifications it is seen that there are four classifications of civil court in a District. The court of the District Judge is the highest in the District and the court of the Munsif is the lowest one in level and judicial and administrative capacity. Furthermore sec. 9 provides the administrative control of Courts which reads as subject to the superintendence of the High Court, the District Judge shall have administrative control over all the Civil Courts under this Act within the local limits of his jurisdiction.

 

 Another Act i.e. the Presidency Small Cause Courts Act, 1882 (Act No. XV of 1882) was enacted for the purpose of consolidating and amending the law relating to the Courts of Small Cause established in the Presidency-towns of Calcutta, Madras and Bombay and Sec. 8 classifies the civil courts as:-

1. The Court of Chief Judge; and
2. The Court of other Judges.

                             
The last one Act I.e the City Civil Court Act, 1953 ( West Bengal Act XXI of 1953) was enacted to establish an additional Civil Court for the City of Calcutta or the City Civil Court. This is a very short enactment including 22 sections and sec. 4 classifies the court as:-

1. The court of Chief Judge; and
2. The court of other Judges.

(ii) The Subordinate Criminal Courts:-


The classifications and the hierarchy of the subordinate criminal courts along with their  respective jurisdictions in India have been provided in the Code of Criminal Procedure 1973 (Act No. 2 of 1974) these are as follows:-

1. The Court of Session;
2.The Courts of Judicial Magistrates;
3.The Courts of Metropolitan Magistrates;
4. The Courts of Special Judicial or Metropolitan Magistrates; and
5. The Courts of Executive Magistrates



Now I here would like to give more specification and details about the hierarchy and the constitution of the subordinate criminal courts in terms of their power and jurisdictions and the Court of Session includes the courts which are as:-

1. The court of Session Judge;
2. The court of Additional Session Judge;
3. The court of Assistant Session Judge;



Above three courts have the powers to try the session triable offenses and have the powers to pass the sentence of imprisonment for ten years and above accordingly. Now comes the courts of Judicial Magistrates in the area other then the metropolitan cities which are as:-

1. The court of Chief Judicial Magistrate/Additional Chief Judicial Magistrate;
2. The court of Sub-Divisional Judicial Magistrate;
3. The court of Judicial Magistrate or Special Judicial Magistrate of First Class;
4. The court of Judicial Magistrate or Special Judicial Magistrate of Second class



Above four courts have the powers to try the magistrate triable offences and have powers to pass the sentence of imprisonment up to seven years and  three respectively. There in every metropolitan area there are the courts of Metropolitan Magistrates having equal powers and jurisdictions that of Judicial Magistrates which are as:-

1. The court of Chief Metropolitan Magistrate/Additional Chief Metropolitan              Magistrate;
2. The court of Metropolitan Magistrate; and
3. The court of Special Metropolitan Magistrate;



Now I hereby discuss about the courts of Executive Magistrates which act and function as a quasi-judicial bodies and play a vital role in the maintenance of the law and order and the public order and tranquility. The following are the hierarchy of the courts of Executive Magistrates:-

1. The District Magistrate;
2. The Additional District Magistrate;
3. The Sub-Divisional Magistrate;
4. The Executive Magistrate ; and
5. The Special Executive Magistrate;



In the similar manner  as there is the City Civil Court Act, 1953 ( West Bengal Act XXI of 1953) in the civil side to contribute the civil justice administration system  in the metropolitan  area of calcutta, in the likewise manner there is also the City Sessions Court act, 1953 (West Bengal Act XX of 1953) to contribute towards the criminal justice administration system which establishes a Court of Session for the Presidency-town of Calcutta. This is also  a very short enactment including 17 sections and sec. 4 classifies the court as:-

1. The court of Chief Judge; and
2. The court of other Judges.



Above all are the descriptions in brief about the  definitions, kinds and the hiearchy of the different courts from the top the Hon’ble Supreme Court to the bottom the Court of Civil Judge (Jr. Division)/ Judicial Magistrate existing and functioning in India and which are the vital units/organs in the justice administration system in the Indian polity and also in the largest democracy of the world.


Wednesday, February 14, 2018

Deep Web What it is ?

 Deep Web What it is ? 
By Prashant Mali

The surface web is the entire Internet for most users, but it represents a fraction of available content. The surface web is that part of the Internet that is accessible by standard search engines, either by indexing, or through use of the site’s IP address. By contrast, the deep web is unfamiliar to most of the public and is larger by orders of magnitude. 

Characterised as the submerged part of the iceberg, researchers describe the deep web’s size in various and conflicting ways: over 96 percent of content on the world wide web, unguessable, 7500 terabytes, infinite, and 500x the size of the surface web. Although imprecise, these estimates indicate that the deep web contains much more content than the surface web. Generally speaking, the deep web is the content not indexed by standard search engines, like Google.
The only U.S. court that has attempted to define the deep web, described it as follows:
"The portion of the Web that is not theoretically indexable through
the use of “spidering” technology, because other Web pages do not
link to it, is called the “Deep Web.” Such sites or pages can still be
made publically accessible without being publically indexable by,
for example, using individual or mass emailings (also known as
“spam”) to distribute the URL to potential readers or customers, or
by using types of Web links that cannot be found by spiders but can
be seen and used by readers.

The deep web contains all manner of content including text, photographs, videos, and music. Large academic, library, and proprietary databases are stored on the deep web, including core content from the U.S. Patent and
Trademark Office, Thomson Reuters Westlaw, and NASA.
The distinctions between the deep web and the surface web are sometimes imprecise because content on the deep web can be “surfaced” in several ways. Similarly, the deep web can be searched even though it is not indexed like the surface web. While research in the deep web requires considerable technical facility, specialized deep web browsers, like Tor, allow visitors to browse the deep web without having to rely entirely on pre-identified URLs.

The dark web has been characterized as a subset of the deep web. Controversial and illicit transactions reputedly transpire on the dark web, including human trafficking, narcotic sales, and contracts for killings. The dark web relies on anonymity tools to conceal both the seeker and the provider of such services.It is not accessible through surface web browsers like Internet Explorer or Firefox, but is accessible via specialized and anonymized browsers such as Tor or I2P. 

Tor facilitates browsing of dark web services without disclosing the user’s IP address, which would otherwise reveal the user’s network identity and location.
The Tor protocol leverages pseudomains like .onion as well as anonymous introduction points and relays between users, making de-anonymization difficult.

While the dark web and deep web contain criminal elements, both are routinely used for less nefarious purposes by those seeking anonymity. The U.S. Navy uses Tor for intelligence gathering. Journalists pursue controversial leads in the deep web to avoid government monitoring.An array of law enforcement agencies search for illicit conduct using Tor because Tor hides government IP addresses, ensuring covert surveillance.Whistleblowers reveal corporate and governmental malfeasance on the deep web to avoid retribution.

But increasingly, normal Internet users opt for deep web browsing simply for additional privacy. Tor’s website states that Tor “prevents somebody watching your Internet connection from learning what sites you visit, and it prevents
the sites you visit from learning your physical location.” Invasive commercial browsers and search engines cannot monitor, collect, aggregate, and sell user information, like browsing history, if the user is effectively hidden while searching the web. Similarly, governmental surveillance is
rendered substantially more difficult.

Monday, December 18, 2017

Bitcoin Tax by Indian Government: How

TAXATION  OF  BITCOIN  AND  OTHER  CRYPTO CURRENCIES IN  INDIA 😊

To understand the tax implications of Cryptocurrencies in India, the following points need to be understood under the context of the Income Tax Act:

1) Business Income - These are the profits and gains received from any business or profession carried on by the tax payer at any time during the Financial Year. It includes 'any' compensation received or other payment due to be received. Further, the compensation may be received in Cash or Kind.

2) Capital Gains - It means any income which has been derived from a 'Capital Asset' (whether movable or immovable)

3) Capital Asset - It means property of any kind held by the taxpayer, whether or not connected with his business or profession.

However, this does not include any Stock in Trade

Note: Since the cryptocurrencies have not been declared as legal tender by the Reserve Bank of India, these cannot be considered as legal tender (cash) and shall be considered as an asset. With a general understanding of the above terms, we move on to understand how cryptocurrencies would be taxed under different scenarios:

Scenario 1: When a person receives Cryptocurrency as payment for rendering goods or services

If a provider of goods or services receives any payment by cryptocurrency, then, the fair market value of the cryptocurrency received as consideration for rendering the goods or services will be considered as the consideration (that is the sale amount). Hence, the difference between the Fair Market Value of the cryptocurrency and the cost of provision of goods or services will be treated as Business Income in the hands of the taxpayer and the resultant Business Income will be charged to tax at the applicable slab rate.

Let us take the following example to understand the above more clearly:

Mr. A provides services for which he agrees to receive 2 Bitcoins. For simplicity purpose, assume the cost of provision of service as Rs. 5,00,000/- and the Fair Market Value of 1 Bitcoin = Rs. 5,50,000/-. Hence, by applying simple mathematics we can conclude that the total consideration for the services rendered is Rs. 11,00,000/- (5,50,000*2) and therefore the Business Income is Rs. 6,00,000/-

Continuation of Scenario 1: The person receiving cryptocurrency as consideration sells the cryptocurrency

Now as soon as the person receives the cryptocurrency as consideration, it becomes his capital asset under the assumption that it is not Stock in Trade (which is discussed later). Therefore, as and when the person sells the cryptocurrency, the resultant difference between the Fair Market Value on the date of receipt of cryptocurrency (from the provision of goods or services) and the date of sale of cryptocurrency will be treated as Capital Gain.

Further, if the cryptocurrency is held for 36 months or less, it will be treated as Short Term Capital Gain. If it is held for more than 36 months it will be treated as Long Term Capital Gain.

While computing Long Term Capital Gain, the taxpayer will get the benefit of indexation.

The bifurcation of Short Term Capital Gain and Long-Term Capital Gain is important since the Short Term Capital Gains are taxed at Slab Rates and Long-Term Capital Gains are taxed @ 20%.

Let us continue the example taken in Scenario 1:

Suppose the bitcoins received by Mr. A is sold by him @ Rs. 5,75,000/- per Bitcoin then the value of the consideration that will be received by Mr. A is Rs. 11,50,000/-. Hence, the Capital Gains would be Rs. 50,000/- (11,50,000 - 11,00,000) and depending on the period of holding of the cryptocurrency, it will be taxed as Short Term Capital Gain or Long Term Capital Gain

Scenario 2: A person paying consideration by cryptocurrency for receiving any goods or services

If a person availing any goods or currency pays consideration in the form of cryptocurrency, then in such a case there will be aspects which will need to be considered:

i) Capital Gains
ii) Amount (Quantification) of the expense

Capital Gains: The Capital Gains will be determined in the same manner as discussed in 'continuation of scenario 1' and will be taxed accordingly. However, in this case the relevant dates for determination of period of holding shall be the date of acquisition of the currency and the date of payment

Amount of expense: The amount of expense shall be the Fair Market Value of the cryptocurrency on the date of payment

Let us take the following example to understand the above clearly:

Mr. A avails goods worth Rs. 11,50,000/- the payment for which is discharged by paying 2 Bitcoins (5,75,000 * 2). Assuming the cost of acquisition of 2 Bitcoins to be Rs. 10,00,000/- (5,00,000 * 2), the resultant Capital Gain will be Rs. 1,50,000/- and will be taxed as Short Term Capital Gain or Long-Term Capital Gain depending on the period of holding.

The amount of expenditure will be the Fair Market Value of the Bitcoins that is Rs. 11,50,000/-

Scenario 3: A person Investing / Trading in cryptocurrency

This is the simplest to understand. However, the important aspect to be to be considered is whether the activity is to be considered as Investment or Trading.

If the activity is considered as Investment the difference between the sale price and purchase price will be treated as Capital Gains (the treatment will be as discussed earlier) and on the contrary if the activity is considered as Trading, the difference will be treated as Business Income irrespective of the period of holding.

Determining whether the difference will be considered as Capital Gains or Business Income will depend solely upon the intention of the person at the time of acquisition of the cryptocurrency.

Conclusion: The Indian Tax laws do not have a specific mention on how cryptocurrencies are to be taxed in India and remains a grey area, particularly as the exposure of people increases until a specific mention in the law is made. Even thou Chairman of direct tax has announced that the profit earned from bitcoin trading would be taxed.

The cryptocurrencies are not declared as legal tender by the RBI and spelled by Finance Minister himself in the budget speech, it hence may be treated as an asset.

Further, it shall be kept in mind that the cryptocurrency market is an unregulated market and risk of investment remains high without support of Indian Law.

Thursday, November 2, 2017

Can GDPR Fines be covered under Cyber Insurance in India?


Can GDPR Fines be covered under Cyber Insurance coverage in India?
By Prashant Mali, 
Cyber Law & Privacy Expert.
Cyber policies usually grant cover for civil fines provided that these fines are “insurable at law”.
Where insurance for fines and penalties is available, this is usually as part of an operator’s general liability policy, although, as set out above, there is no general rule and some such policies routinely exclude such cover). In addition, prudent directors of port and terminal operators who are faced with the possibility of personal exposure to civil fines will take steps to ensure that their D&O policy will cover them if they are investigated personally. 

Example Policy Terms
Insurance coverage is available for fines and penalties. A popular form of cyber insurance includes, as an item of covered loss:
[C]ivil fines or penalties imposed by a governmental agency and arising from a Regulatory Action, unless the civil fine or penalty imposed is uninsurable under the law of the jurisdiction imposing such fine or penalty.

Another popular policy form provides coverage for "Penalties," defined as:
[A]ny civil fine or money penalty payable to a governmental entity that was imposed in a Regulatory Proceeding by the Federal Trade Commission, Federal Communications Commission, or any other federal, state, local or foreign governmental entity, in such entity's regulatory or official capacity; the insurability of Penalties shall be in accordance with the law in the applicable venue that most favors coverage for such Penalties.

Based on these definitions (which are typical), several features are prominent:
  • The fines or penalties must be "imposed by" a governmental agency.
  • The fines or penalties must be insurable under the applicable law.
  • The fines or penalties must be paid to a governmental entity or to a consumer redress fund.

While it is not an inbuilt coverage, fines and penalties can be covered under a D&O policy by suitably modifying the definition of loss or in other appropriate manner. Reproduced below is one of the definitions as found in the policy wording.

“Loss also includes civil and administrative fines and penalties, awarded against Insured Persons, to the extent such are insurable by law, and the multiplied portion of multiple damages”

There is no express law in India including Companies Act, 2013 which declares any fine and penalty as uninsurable.

Sec 197 of Companies Act, 2013, reproduced below for brevity

Section 197(13) of Companies Act, 2013:
“(13) Where any insurance is taken by a company on behalf of its managing director, whole-time director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying any of them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach of trust for which they may be guilty in relation to the company, the premium paid on such insurance shall not be treated as part of the remuneration payable to any such personnel:
Provided that if such person is proved to be guilty, the premium paid on such insurance shall be treated as part of the remuneration.”
Surprising as it seems, there appears to be no section in the Companies Act 2013 which prohibits indemnification of any nature .

It needs to be clearly understood that as in the case of other payments, prior approval of insurance company is a prerequisite for claiming this loss. One of the policy wordings is reproduced below. Provision relating to non-admission of liability is present in all policy forms, while the language may vary from insurer to insurer.

“The Insured shall not admit or assume any liability, enter into any settlement agreement, or consent to any judgment without the prior written consent (which shall not be unreasonably delayed or withheld) of the Insurer. Only liabilities, settlements and judgments resulting from claims defended in accordance with this policy shall be recoverable as a loss under this policy”

It is good for the directors to seek, in their letter of appointment, appropriate and adequate indemnity provisions – indemnity against all losses and expenses incurred by them in relation to the discharge of their duties unless such loss/ expense is caused by their own deliberate and malicious actions. It pays to be explicit and have more inclusive provisions.


Insurability
A looming question in the case of insurance for fines and penalties is whether such items can be insured despite policy language expressly providing for such coverage. As with the insurability of punitive damages, there is no uniform view. However, one can make several general observations:
  1. Fines or penalties that are based on intentional or willful conduct are likely to be challenged by the insurer based upon public policy arguments.
  2. Fines or penalties that are "punitive" in nature are more likely to be challenged by the insurer than those that are "compensatory" in nature.
  3. Penalties that are assessed vicariously against a policyholder (such as when a corporation is held liable for an unauthorized act of its employee) are less likely to be challenged.
Case law exists under a variety of statutes, and in a variety of state and federal jurisdictions, that assesses whether particular fines or penalties are punitive or compensatory, or are insurable. Cyber policies address insurability through choice of law and choice of venue. As can be seen from the example language quoted above, there are two basic approaches:
  1. One version permits coverage except to the extent that the law of the jurisdiction imposing the penalty forbids such coverage;
  2. The other version permits coverage so long as the most favorable applicable venue permits such coverage.
Under conventional choice of law procedures, an "applicable venue" is likely to be one that has some sort of relationship to the parties or to the underlying facts. A standard provision for punitive damages directs that the applicable law is
"the law of the jurisdiction most favorable to the insurability of such [punitive] damages, provided such jurisdiction has a substantial relationship to the relevant Insured, to the Company, or to the Claim giving rise to the damages."
This type of formulation appears to provide more flexibility for coverage of such penalties than one in which the penalty-imposing jurisdiction is selected.

International variation
Internationally the position is likely to be similar, albeit with some noteworthy differences, in other jurisdictions. For example, it is common in Australia for cover to be provided in respect of civil fines and some insurers have extended liability insurance to include criminal fines imposed in circumstances other than where the insured has behaved in a reckless manner (or worse). Whether or not such policies are legally enforceable remains a hotly contested issue, but despite the difference in approach from the English position, the underlying public policy issues are the same.
In the US, a number of products are available which provide cover in respect of investigations under the Foreign Corrupt Practices Act, although in keeping with the policy considerations described throughout this article, cover is limited to the costs of such an investigation and coverage for any fines or penalties is specifically excluded.
In UK the leading case law under on whether regulatory fines are “insurable at law” is decision of the Court of Appeal in Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472. In this case, pursuant the Competition Act 1998, the Office of Fair Trading issued a regulatory fine against Safeway.  As a result, Safeway sued its own directors in order to claim under their D&O policy.
The First Instance Judge, Flaux J, noted that:
“…the real target of the present claim is not the assets of the individual defendants, many of whom are of modest means, but the directors’ and officers’ liability insurance available to the defendants…”
Flaux J, after reviewing the previous authorities, held that the “illegality defence” applied to the regulatory fine relating to the breach of the Competition Act 1998.  The breach was held to be sufficiently serious and “morally reprehensible”, even where it had been committed without intention.

Although potential exposure to fines and penalties is an important risk management consideration for port and terminal operators, it appears that the extent to which insurance for liabilities of this nature can be obtained is limited, at least in England and Wales. It is clear that as a matter of English law, criminal fines and penalties cannot be insured for public policy reasons and, although there is no law in this area, similar considerations are likely to apply in the case of civil fines, so that these will only be insurable where the conduct in respect of which they are incurred does not involve deliberate wrongdoing.
The ex turpi causa maxim means that even where such cover can be obtained, an insured will be precluded from making a claim if the conduct to which the fine or penalty attaches involved intentional or negligent conduct.

Conclusions
Legally: While many insurance policies provide cover so far as insurable by law the reality is that GDPR fines themselves will likely not fall for cover. There may be cover for the costs associated with complying with, defending or appealing investigations from the ICO. And insurers may, of course, elect to pay out an amount in respect of the fine (potentially leading to issues in respect of reinsurance recovery). Note, also, that Bermuda legislation does not prohibit passing on liability for fines and may therefore provide some excess options worth considering.
Commercially: Regardless of any debates around the legal position in coverage of fines, the commercial reality is that the value of cyber cover comes in the knowledge and expertise that can be provided by the insurer, particularly in terms of responding to a data security breach. Cyber policies will generally cover systems failure, data restoration, as well as third party claims for damages for lost data or breaches of security and privacy and may also cover amounts paid in response to cyber extortion. Crucially, they will usually also provide access to necessary and pre-approved vendors and a package of cover that includes: 
  • pre-breach offerings; 
  • disaster recovery costs; 
  • communication and notification costs; 
  • paying for forensic investigations to determine the cause of the breach; 
  • legal advice; 
  • engaging experts to manage public relations and protect the company's reputation; 
  • lost income and payroll as a result of a breach; and 
  • credit monitoring for customers.
Of course, insurance can be no substitute for robust data protection policies - and the potential to be on the wrong end of a GDPR penalty makes it all the more important for companies to invest in such policies and procedures. However, in today's climate of increased cybercrime, it is vital for businesses to arrange cyber-cover and to partner with insurers in order to assess its exposures and be in a position to respond swiftly and effectively as and when a security breach occurs. Just don't have an unrealistic expectation that it will provide indemnification in respect of any GDPR fines.


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