Experts CornerSrikant Parthasarathy

   

The past year has been filled with news about how addictive the online gaming industry can be and the ill effects that it produces on the youth. So much so, that there is a constant tussle between regulation versus banning. The saga of regulating the unregulated and striking a balance between “banning” and “regulation” is far older than we think. The Public Gambling Act was first put in place in 1867, which is a mere 7 years after the Penal Code came in to existence. The obstacles of prohibition have been far too few as compared to the fruits of regulation.

Case in point is the tax which is charged in India on gambling income (whether online or offline), be it personal tax or direct tax, or the application of indirect tax on services rendered by the performance of a gamble. At the moment, an income tax rate of 30% plus surcharge is charged on gambling income irrespective of the method of gamble and is classified under Section 115-BB as “casual income”. A skill based game is taxed at 18% and the rates goes up to 28% under the GST regime. In effect, nothing has stopped the GST Council of India from collection of revenue from gambling. However, the quotient of the mental health creeps in from time to time, irrespective of the fact that a gambler may end up paying more than 60% of the income earned through a gamble. This does not mean that gambling is healthy, or it should not be banned. It only indicates that the fruits of a gamble are still being used to further the economy, however, the act of “gamble” itself is shunned upon.

Europe struggled with the same phenomenon and the famous Berlington Hungary Tanácsadó és Szolgáltató kft v. Magyar Allam1 where it was specifically opined the States have the prerogative to enact laws against online gambling, however, the States shall not resort to a discriminative laws against a particular mode of gambling. The decision, puzzling as it was, laid down the foundation of regulation and struck a balance on the “transparency” in the operations of a gamble versus the legitimacy of the gamble. The emphasis of the Court of the European Union placed on the “consistency” and “systematic” way a regulation is applied.

Another puzzling instance is where the regulation is sought for gambling under the guise of a completely unrelated and vaguely connected law which penalises an alleged act of money laundering. The banning of online gaming is inevitably intertwined with Prevention of Money Laundering Act (PMLA) and a presumption of guilt is accorded to a gambled income and the gambling enabling company, which is the usual way the PMLA law works. The perplexity in viewing this issue from the lens of a PMLA is the application of a law which is not the direct law regulating the “act in question”. This riddles not only the judicial system but also overburdens the prosecutors to find causal links toward prosecuting a case that squarely does not fit the case. Not to mention, is the ordeal that a person goes through when the Enforcement Directorate (ED) is involved in an unregulated area.

It is time for India to recognise the pitfalls in the non-regulation of the online gaming industry and the longer India takes to regulate it, the more would be the abuse of the process through obsolete or inapplicable laws. Also, this delay results in an economy which is unregulated and operates within closed doors, uncannily mimicking the “prohibition era” in the United States of America, when liquor was sold more than ever. The All India Gaming Foundation, as recent as 2022, has estimated the market size of this unregulated industry to be around USD 1 billion or around INR 8300 crores. This translates to a revenue collection from GST alone to be around INR 2324 crores, or roughly translating to INR 194 crores. By the August 2022 data released by the Department of Revenue, Government of India, of the GST collections of the States, where online gambling is allowed (Goa, Sikkim and Lakshadweep), the total collection of GST from these States stand at INR 647 crores, of which, by the calculation above, a whopping 31% could be from online gambling companies, which unfortunately, is not owing to the online gambling companies setting up clandestinely in other States or setting up shops outside India, both of which not only harm the tax collection, but also affect the charging of tax in India.

The cue that the lawmakers can take is from the way the regulation is in force from various jurisdictions like the United Kingdom, Europe, which have let reasonable restrictions, however not discriminate restrictions being placed on gambling. This helps structure a law that not only survives the test of time but also contributes to the certainty in business that the Indian economy desperately seeks. The fence-sitting position of the legislature may only incentivise operation of money launder online gambling, rather than enabling a proposition to tax and regulate efficiently, which unfortunately exists for the former with no sight of the latter in the Budget 2023 discussions nor is there any indication of an expectation of this being called out on 1-2-2023, when the Budget of India for the next fiscal is tabled.


† Professor of International Law and an alumnus of The Hague Academy, Netherlands. Author can be reached at casrikantparth@gmail.com.

†† Amirthalakshmi R, Principal Counsel, Chambers of Dr. Srikant Parthasarathy

1. (Case C-98/14) EU:C:2015:386; (2015) 3 CMLR 45, ECJ

NLU Delhi
Call For PapersLaw School News

   

The Centre for Transparency and Accountability in Governance, National Law University Delhi welcomes contributions for the IXth edition of the International Journal of Transparency and Accountability in Governance (Double Blind Reviewed & Refereed Journal) from students, academicians, activists, professionals and other stakeholders involved in the fight for the freedom of information across the globe.

The International Journal of Transparency and Accountability in Governance (IJTAG) is the flagship Journal, with ISSN No: 2395-4337 of the Centre for Transparency and Accountability in Governance (CTAG), published under the aegis of the National Law University, Delhi.

About the Journal

The objective of launching this journal is to function as a forum for reflective writings on the theory and practice of good governance models by keeping abreast with research being done by scholars in this field. The focus would be to provide high-level commentary on issues applicable to improving governance measures in India. The journal would concentrate on creating academic discourse by delivering top-quality articles written by experts. The IJTAG would appear annually, providing insights valuable to legal professionals, researchers, students, and academicians. The Publication Committee of the CTAG, under the guidance of the editor and referral board consisting of some celebrated names, is responsible for editing and bringing out this journal.

The Publication Committee of CTAG is inviting quality research papers from professionals, researchers, students, NGOs, Civil Societies, academicians and other stakeholders involved in combating corruption and promoting good governance for the forthcoming edition of the journal. The research paper should apply research skills and appropriate research methodology. The research paper should be thematic, and identifying sub-themes is highly appreciated. It should have proper research questions and should also reflect the findings.

Submission Guidelines

The submission can be sent under the following categories —

  1. Research Papers – Between 5000 and 10000 words, including footnotes. Papers in this category are expected to engage with the theme comprehensively, examine literature thoroughly, and offer an innovative reassessment of the current understanding of that theme. It is advisable, though not necessary, to choose a theme that is of contemporary importance. Purely theoretical pieces are also welcomed.

  2. Notes/Comments — Between 3000 and 5000 words, including footnotes. This section should include a thought-provoking and innovative piece consisting chiefly of personal opinions and analysis.

  3. Judgment analysis/ Comments — In between 2500- 3000 words, including footnotes. This part should analyse contemporary Indian or International judicial pronouncements relevant to the themes. It must identify and examine the line of cases in which the decision in question came about and comment on implications for the evolution of that branch of law

  4. Book/Reports Review — Word limit is 2000- 3000 for the review of a book relevant to the themes. The study should identify the author’s relevant arguments and present a comprehensive analysis.

The themes to be followed for each type of submission, as well as the detailed submission guidelines can be accessed here.

The submissions must be emailed to ctag@nludelhi.ac.in with the subject heading ‘IJTAG — Submission (Volume IX).’ The last date for submissions is 30th November 2022.

Case BriefsSupreme Court

   

Supreme Court: In a case challenging the result of direct recruitment for Punjab/Haryana Superior Judicial Service, the Division Bench of Ajay Rastogi* and C.T. Ravikumar, JJ., reversed the impugned order of the Punjab and Haryana High Court rejecting the challenge to the selection process.

The Court held that the discrepancy regarding incomplete question paper could not be an inadvertent human error and that somebody must be held responsible for it. However, considering that the exam was conducted after 4-5 years, the Court opined that a fresh selection process could not be initiated, and the endeavour of the Court should always be to salvage the selection as much as possible.

Grounds for Challenge

The appellant is one of the applicants who had participated in direct recruitment to Punjab Superior Judicial Service/Haryana Superior Judicial Service, had approached the Punjab and Haryana High Court on being disappointed by not being qualified in the written examination with his trifold grievance:

  • Though, Paper V (Criminal Law) was of 200 marks, at the commencement of the examination, the question paper handed over to the candidates contained only 4 questions (nos. 1, 2, 3, and 5) of 160 marks in total instead of 200 marks. It was only when the complaint was made by the candidates that, after approx. an hour after the commencement of the examination, question no.4 was handed over as a supplementary question paper and no extra time was given for answering the additional question.

  • Despite repeated demands, the respondents have failed to provide the marks obtained by the appellant in the written examination. Even the application filed by the appellant under the Right to Information Act, 2005 came to be rejected.

  • In Paper VI (General Knowledge) which was an objective type paper, there were no instructions and no OMR sheet was supplied and the candidates were called upon to make a circle out of the four multiple choices, and the question paper supplied had to be returned to the Invigilators.

  • No provisional answer key was uploaded.

Impugned Decision

All three objections raised by the appellant were repelled by the High Court at the motion stage, without calling for a written response from the respondents. Aggrieved thereby, the appellant had challenged the impugned order of the High Court by contending that the process adopted by the respondents was neither transparent nor fair and the written examination may be cancelled or at least the Paper V may be cancelled and be conducted afresh; only thereafter the merit list be declared of the candidates who qualified the main examination.

Interim Order

Noticeably, the Supreme Court, by an earlier order while calling upon the respondents for their written response, had permitted the respondents to continue with the interview process with a further direction that the result would not be declared in the meantime. Hence, the interview has been held and the result is pending declaration.

Analysis and Findings

Non-availability of OMR Sheet

With regard to the objection about Paper VI (General Knowledge), the Court observed that all instructions were made available to the candidates specifically indicated on the overleaf of the question paper and all the candidates had a common level playing field. Hence, in the absence of any material on record in rebuttal, the allegation was not sustainable and deserved to be rejected.

However, the Court added that to keep transparency in the process of holding examination, particularly in such cases where there is a multiple-choice question paper, it is always advisable that there shall be an OMR so that the question paper can be retained by each of the participants and after the examination is held, and a provisional answer key is to be uploaded inviting objections from the candidates and after collating such objections, the same be placed before a subject expert committee and the report of the committee shall be examined by the recruiting authority and thereafter the final answer key is to be uploaded.

Non-disclosure of Marks under RTI Act

So far as the marks of the written examination not being supplied to the appellant under the Right to Information Act, 2005 was concerned, the Court opined that as long as the process is not complete, the marks of the written examination are not to be uploaded or made available to the candidates and if it is being permitted, that will not be in the interest of the applicants. The Court said,

The disclosure of the marks in the main examination before it is finalised and the viva-voce is conducted would be against the principles of transparency, rather it will invite criticism of bias or favouritism.

Incomplete Question Paper

On the contention that only four questions were there in the original paper and question no. 4 of 40 marks was handed over to the candidates later on, the Court opined that the same could not be an inadvertent human error as being projected by the respondents. Calling it a serious lapse on the part of the recruiting authority, the Court held that somebody must be held responsible for it and such kinds of lapses certainly cannot be countenanced by the Court.

However, noticing that there was no objection in reference to the four questions (nos. 1, 2, 3, and 5) of Paper V (Criminal Law), the Court opined that it would be just to let the respondents evaluate question nos. 1, 2, 3 and 5 of Paper V (Criminal Law) of 160 marks and exclude the question no.4 which was supplemented at a later stage of 40 marks while evaluating the marks secured by the candidates in Paper V. The Court expressed,

At this stage, the Court cannot be oblivious of the fact that the Punjab/Haryana Superior Judicial Service Examination, 2019 has been held after 4-5 years and since the fate of the examination 2019 is still sub-judice in this Court, fresh selection process could not have been initiated and if this irregularity pointed out can be possibly eliminated from the process of selection, particularly in the written examination, the endeavour of the Court should always be to salvage the selection as possible.

Conclusion

In the light of above, the appeal was allowed and the impugned order of the High Court was set aside. Additionally, the Court directed that the result of the intervenor (Aashish Saldi), who had participated as against 10% quota in-service officer under Rule 7(3)(b) of the Punjab Superior Judicial Services Rules, 2007 and had no lis with the present process, be declared and further action may be taken in accordance with Rules, 2007.

[Harkirat Singh Ghuman v. Punjab & Haryana High Court, 2022 SCC OnLine SC 1111 , decided on 29-08-2022]

*Judgment by: Justice Ajay Rastogi


Advocates who appeared in this case:

Counsel for the Appellant: Deepkaran Dalal;

Counsel for the Respondent: Abhimanyu Tewari;

Counsel for the Intervenor Aashish Saldi: Kaveeta Wadia.


*Kamini Sharma, Editorial Assistant has put this report together.

(2021) 10 SCC J-1
OP. ED.SCC Journal Section Archives

An essential characteristic of a vibrant and progressive Democracy is that its citizenry is well informed about the functioning of the decision-making bodies that make laws, rules and regulations governing it. The citizens being aware of their rights are not only entitled but expect and demand transparency, responsiveness, accountability and openness in governance. Due to the technological advancements, there is an information explosion within the society in India, where any information gets a quick and wide reach. Present-day experience demonstrates overwillingness of the people to criticise a particular decision of the State and its instrumentalities through various means including social media platforms. An informed citizenry like ours, has developed over the years, an inherent need and desire to be consulted and allowed to participate, right at the formative stage of the decision-making. It can safely be deduced that the time has come when decision-making statutory bodies/public authorities can no longer take a decision in a non-transparent manner, without participation of the people and other stakeholders and impose the said decision on them. Transparency is now well established as sine qua non for an effective and efficient decision-making process leading to a decision which is acceptable to the society at large and the various stakeholders.

However, even though compliance with Transparency is vital in the functioning of the statutory authorities, the concept of Transparency itself lacks clarity and uniformity. There is no standard statutory definition of Transparency nor statutorily prescribed standard procedure/methodology to guide the authorities. Application of Transparency is subject to the discretion and understanding of the respective public Authority. This needs to change.

TRANSPARENCY: MEANING, ROLE AND SIGNIFICANCE

“Transparency” is a term of wide amplitude and can have varied meaning depending on the facts and circumstances. In general terms it is “the quality or condition of being transparent; state of being transparent; that which is transparent. Transparent means easily seen through, recognised, understood, or detected, manifest, evident, obvious, clear.”1 In terms of governmental action it means “the concept that actions of Government and decision processes should be clear and open to easy scrutiny by public.”2 The Supreme Court in BALCO Employees’ Union v. Union of India3 held that Transparency does not mean the conducting of the government business while sitting at the crossroads in public, rather it means that the manner in which the decision is taken, is made known to public.

In terms of complying with the requirement of transparency by a statutory body/Regulator, in its decision-making process, the term would largely include the following aspects:

(a) the public and the stakeholders being made aware of the intention of particular statutory body to make a regulation, tariff order or such other decision;

(b) allowing access to the stakeholders including the public to the facts, data, material and other relevant factors that the decision-making body wishes to refer and rely on while making its decision;

(c) holding consultation with stakeholders and allowing them to participate by giving their views and counterviews to the issues raised by the decision-making body;

(d) statutory body takes the decision after taking note of the major views and counterviews on the issue it is addressing, document the same and give reasons in writing in support of its decision which is in a form that is easily accessible to all.

The benefits of complying with transparency in the decision-making process cannot be emphasised enough. When a statutory/public authority invites comments on its proposed action from the public at large and the stakeholders, then it at once becomes inclusive. Assurance and application of transparency in reality is directly related to instilling, building and sustaining trust of the public and the stakeholders in the functioning of that body. Transparency ensures openness in governance and presents the authority as accountable and responsive. It ensures minimisation of favouritism and corruption. One of the direct advantages of following principles of transparency in the decision-making process is that consultation with stakeholders and their participation in the form of them giving their views and counterviews to the issues raised by the authority enables it to examine and widen its own perspective. Extensive and wide-ranging views, give it an opportunity to examine certain aspects related to the issue which it never contemplated or had perceived. This leads to a more comprehensive and acceptable decision being taken by the authority.

Transparency in the decision-making process plays a vital role when the authority is intending to take a decision to ensure level playing field in the sector and is trying to ensure an orderly growth. It also enables the authority in laying down a positive roadmap for the future of the industry after taking into consideration the views, concerns and goals of the various stakeholders. The authority during the consultation process gets an opportunity to understand the competing interests and is able to form a decision which in its opinion balances those interests. This enables it in taking a decision which is non-discriminatory, non-arbitrary, fair and reasonable. The participative consultation process also ensures that the decision of the authority which is reasoned has certainty and uniformity which in turn may lead to reduction in litigation.

The Supreme Court has recognised Transparency in the functioning of statutory bodies as significant and invaluable. In Global Energy Ltd. v. Central Electricity Regulatory Commission4, the Supreme Court emphasised the role of transparency and openness in governance and held that compliance with these principles satisfies the requirements of Articles 14, 19 and 21 of the Constitution of India. It held that: (SCC p. 589, para 71)

71. The law sometimes can be written in such subjective manner that it affects the efficiency and transparent function of the Government. If the statute provides for pointless discretion to agency, it is in essence demolishing the accountability strand within the administrative process as the agency is not under obligation from an objective norm, which can enforce accountability in decision-making process. All law-making, be it in the context of delegated legislation or primary legislation, has to conform to the fundamental tenets of transparency and openness on one hand and responsiveness and accountability on the other. These are fundamental tenets flowing from due process requirement under Article 21, equal protection clause embodied in Article 14 and fundamental freedoms clause ingrained under Article 19. A modern deliberative democracy cannot function without these attributes.

(emphasis supplied)

Again, in Reliance Petrochemicals Ltd. v. Indian Express Newspapers Bombay (P) Ltd.5 the Supreme Court held the right to know as a fundamental right under Article 21 of the Constitution of India. It held: (SCC p. 613, para 34)

34. … We must remember that the people at large have a right to know in order to be able to take part in a participatory development in the industrial life and democracy. Right to know is a basic right which citizens of a free country aspire in the broader horizon of the right to live in this age in our land under Article 21 of our Constitution. That right has reached new dimensions and urgency. That right puts greater responsibility upon those who take upon themselves the responsibility to inform.

(emphasis supplied)

The Constitution Bench of the Supreme Court in S.P. Gupta v. Union of India6 held: (SCC p. 275, para 67)

67. … The concept of an open Government is the direct emanation from the right to know which seems to be implicit in the right of free speech and expression guaranteed under Article 19(1)(a). Therefore, disclosure of information in regard to the functioning of Government must be the rule and secrecy an exception justified only where the strictest requirement of public interest so demands. The approach of the court must be to attenuate the area of secrecy as much as possible consistently with the requirement of public interest, bearing in mind all the time that disclosure also serves an important aspect of public interest.

Similarly, the Constitution Bench in State of U.P. v. Raj Narain7 had held: (SCC p. 453, para 74)

74.The people of this country have a right to know every public act, everything that is done in a public way, by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. The right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary, when secrecy is claimed for transactions which can, at any rate, have no repercussion on public security. To cover with veil of secrecy, the common routine business, is not in the interest of the public. Such secrecy can seldom be legitimately desired.

(emphasis supplied)

It is evident that the Supreme Court always recognised Right to Know and conformity with principles of transparency and openness in decision making process as flowing out of Article 14, 19 and 21 of the Constitution of India.

In Cellular Operators Assn. of India v. TRAI8, the Supreme Court while referring to the Right of Information Act, 2005 held that openness in governance is a legislatively established fact. It held: (SCC pp. 753-54, paras 86-88)

86. The question of transparency raises a more fundamental question, namely, that of openness in governance. We find that the Right to Information Act, 2005 has gone a long way to strengthen democracy by requiring that the Government be transparent in its actions, so that an informed citizenry is able then to contain corruption, and hold the Governments and their instrumentalities accountable to the people of India. The Preamble to the said Act, in ringing terms, states:

Whereas the Constitution of India has established democratic Republic;

And whereas democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed;

And whereas revelation of information in actual practice is likely to conflict with other public interests including efficient operations of the Governments, optimum use of limited fiscal resources and the preservation of confidentiality of sensitive information;

And whereas it is necessary to harmonise these conflicting interests while preserving the paramountcy of the democratic ideal;

Now, therefore, it is expedient to provide for furnishing certain information to citizens who desire to have it.

87. We find that under Section 4(1) every public authority is not only to maintain all its records duly catalogued and indexed but is to publish, within 120 days from the enactment of the said Act, the procedure followed by it in its decision-making process, which includes channels of supervision and accountability. Section 4(1)(b)(iii) states:

4. Obligations of public authorities.—(1) Every public authority shall—

***

(b) publish within one hundred and twenty days from the enactment of this Act—

***

(iii) the procedure followed in the decision-making process, including channels of supervision and accountability;

88. Under Section 8, there is no obligation to give to any citizen information disclosure of which would prejudicially affect the sovereignty and integrity of India, the security of the State, etc. Subject, therefore, to well-defined exceptions, openness in governance is now a legislatively established fact.

(emphasis in original and supplied)

The Supreme Court while interpreting the provisions of the Right to Information Act, 2005 held in Chief Information Commr. v. State of Manipur9 that: (SCC pp. 6-7, paras 5-6)

5. Before dealing with the controversy in this case, let us consider the object and purpose of the Act and the evolving mosaic of jurisprudential thinking which virtually led to its enactment in 2005.

6. As its Preamble shows, the Act was enacted to promote transparency and accountability in the working of every public authority in order to strengthen the core constitutional values of a democratic republic. It is clear that Parliament enacted the said Act keeping in mind the rights of an informed citizenry in which transparency of information is vital in curbing corruption and making the Government and its instrumentalities accountable. The Act is meant to harmonise the conflicting interests of the Government to preserve the confidentiality of sensitive information with the right of citizens to know the functioning of the governmental process in such a way as to preserve the paramountcy of the democratic ideal. The Preamble would obviously show that the Act is based on the concept of an open society.

(emphasis supplied)

The fact that the public authority/statutory body has to necessarily comply with the principles of Transparency and openness in the decision-making process and governance in general and the stakeholders including the public have a right to know is not only recognised as a facet flowing out of Articles 14, 19 and 21 of Constitution of India but is legislatively mandated under the Right to Information Act, 2005 subject to certain exceptions. In other words, every public authority/statutory body while discharging its functions has to necessarily adhere to the principles of Transparency failing which the decision may be manifestly arbitrary and unreasonable.

TRANSPARENCY: SCOPE, EXTENT AND LIMIT — NEED FOR LEGISLATIVE INTERVENTION

While setting out the obligations of public authorities under Section 4(1)(b)(iii) of the Right to Information Act, 2005, Parliament mandates that every public authority must publish within 120 days of the enactment of the said Act, the procedure followed in the decision-making process, including channels of supervision and accountability. Even though the said provision mandates the public authority to publish its procedure followed in the decision-making process, it does not specify what should be the minimum mandatory procedural steps that should be included in the said process to satisfy transparency. In fact, it leaves it to the discretion of the public authority to devise its own methodology.

Considering the fact that transparency has become an essential obligation for the statutory bodies to comply with while discharging their functions, it is necessary that the scope, extent and limit of transparency is defined. This is essential for the purposes of ensuring certainty and uniformity in the functioning of the public authority/statutory bodies. Each decision-making body cannot be allowed to interpret transparency as per their discretion and evolve their own methodology to ensure compliance with the same. This will create great deal of confusion and lack of clarity which will be an impediment to developing a culture of transparency.

Parliament has recognised the need to stipulate adherence to principles of transparency in the functioning of certain statutory body/sector regulators and has made a specific provision in that regard in the statute concerned. For example, Section 11(4) of the Telecom Regulatory Authority of India Act, 1997 stipulates that the authority shall ensure transparency while exercising its powers and discharging its functions. However, such a stipulation is not there for every regulatory body constituted under a parliamentary Act. Thus, it is evident that even though the concept of adherence to transparency is a necessary condition for any statutory body during its decision-making process, Parliament itself has not mandated it for all such statutory bodies in their respective statutes.

This raises the question whether sufficient action has been taken by the legislature and executive in clearly spelling out the scope, extent and limits of transparency to be exercised by the various authorities and whether it would not be proper to legislatively set out uniform pattern to be followed procedurally?

Parliament has incorporated provisions regarding transparency in certain statutes which constitutes a regulatory body/authority to regulate the affairs of a particular sector/industry like TRAI, which is constituted for regulating Telecom and broadcasting services under the TRAI Act, 1997. A study of the provisions of such Acts where provisions of transparency have been incorporated would demonstrate that the concept of transparency is not effectively infused in the functioning of the statutory bodies. The term transparency itself lacks clarity and has either not been defined or its scope has been laid out in different fashion by Parliament in different enactments. Further, there is no methodology or procedural steps provided under the Act which the authority can follow so as to discharge its obligation of adhering to transparency by performing its functions.

In the absence of clear definition of transparency and guidelines stating the minimum procedural steps that are required to be taken by the authority for ensuring transparency, the statutory bodies interpret the same in varied ways and exercise unguided discretion to evolve their own methodology.

The concept of transparency being vital cannot be left unclear and opaque and its functional implementation/application be subjected to the discretion of the decision-making body. There is a need for institutionalising transparency as a mandatory requirement by defining its normative and functional/procedural characteristics.

NORMATIVE CHARACTERISTICS OF TRANSPARENCY

The necessity to define normative characteristics of the concept of transparency can be ascertained by examining 4 legislations. These are:

(i) the TRAI Act, 1997;

(ii) the Electricity Act, 2003;

(iii) the Airports Economic Regulatory Authority of India Act, 2008 (“AERA Act”);

(iv) the Competition Act, 1992.

Under the TRAI Act, 1997, the authority regulates telecommunications services which includes broadcasting services. The authority discharges various functions under the said Act which includes recommendatory, regulatory, tariff fixation functions and issuance of directions. Section 11(4) states that “the authority shall ensure transparency while exercising its powers and discharging its functions.”

Similarly, under Section 79(3) of the Electricity Act, 2003 it is provided that “the Central Commission shall ensure transparency while exercising its powers and discharging its functions.”

The Airports Economic Regulatory Authority of India Act, 2008 provides:

13. Functions of authority.—(1)-(3) ***

(4) The Authority shall ensure transparency while exercising its powers and discharging its functions, inter alia—

(a) by holding due consultations with all stakeholders with the airport;

(b) by allowing all stakeholders to make their submissions to the authority; and

(c) by making all decisions of the authority fully documented and explained.

The Competition Act, 2002 did not contain any provision specifically mandating transparency. In the Amendment Bill of 2020, a new provision Section 64-A is proposed which states as follows:

64-A. Process of issuing Regulations.—The governing board of the Commission shall ensure transparency while exercising its powers to issue regulations under Section 64, by—

(a) publishing draft regulations along with such other details as may be specified on its website and inviting public comments for a specified period prior to issuing regulations;

(b) publishing a general statement of its response(s) to the public comments, not later than the date of notification of the regulations;

(c) periodically reviewing such regulations:

Provided that if the governing board is of the opinion that certain regulations are required to be issued or existing regulations are required to be amended urgently in public interest or the subject-matter of the regulation relates solely to the internal functioning of the Commission, it may make regulations or amend the existing regulations, as the case may be, without following the provisions stated in this section and record the reasons for doing so in writing.

A bare perusal of the provisions of the four legislations demonstrates that Parliament itself has not provided any clarity to the scope and extent of the concept of transparency. The term transparency is not defined under the TRAI Act as well as the Electricity Act. The authority under the said Acts, interprets transparency in their own way and develop their own methodology to ensure compliance.

Under the AERA Act, 2008, there is some basic minimum outline of the scope of transparency provided, yet again, under the proposed amendment of 2020 to the Competition Act, 2002, the concept of transparency is different from what is provided under the AERA Act, 2008. In fact, even though one of the facets of transparency is understood to be consulted right at the beginning of the decision-making process i.e. formative stage, the proposed amendment to the Competition Act involves participation on the draft regulations i.e. on the proposed decision and not at the very initial stage. This in effect gives a completely different meaning to the term transparency. There is no uniformity in the concept of Transparency under various statutes.

The requirement of adherence to transparency under Section 11(4) of the TRAI Act, 1997 fell for consideration before the Supreme Court in Cellular Operators Assn. of India v. TRAI9 where the Hon’ble Court referred to the provision under the AERA Act, 2008 and held as follows: (SCC p. 751, paras 80-81)

80. Section 11(4) of the Act requires that the Authority shall ensure transparency while exercising its powers and discharging its functions. “Transparency” has not been defined anywhere in the Act. However, we find, in a later parliamentary enactment, namely, the Airports Economic Regulatory Authority of India Act, 2008, that Section 13 deals with the functions of the Airports Economic Regulatory Authority (which is an Authority which has legislative and administrative functions). “Transparency” is defined, by sub-section (4)….

81. This definition of “transparency” provides a good working test of “transparency” referred to in Section 11(4) of the TRAI Act.

Thus, as per the Supreme Court the scope of Transparency given under the AERA Act, 2008 is a good working test of Transparency. For the sake of uniformity, certainty and to give due importance to the mandatory requirement to comply with Transparency in the decision-making process, the scope of transparency as provided under the AERA Act, 2008 must be incorporated through appropriate statutory amendments, to begin with, in every statute where a regulatory body is constituted to regulate a particular sector.

It is equally important for Parliament to define the limits of Transparency. The proviso to the proposed Section 64-A of the Amendment Bill to the Competition Act should be taken note of. The authorities must be given the required elbow space to exercise its wisdom not to follow the Transparency requirement in certain emergent cases involving public interest, public order or security of the State. It is also important to set some limit to the extent of consultation process. The consultation cannot be endless and can also not be so extensive that it creates logistic burden, consumes excessive time and affects the other day-to-day functioning of the Authority.

FUNCTIONAL/PROCEDURAL CHARACTERISTICS OF TRANSPARENCY

In order to effectively implement the requirements of transparency in the decision-making process it is paramount that the procedural steps that are required to be taken by the authority are clearly spelt out. Even though Section 13 of the AERA Act, 2008 spells out the scope of transparency, there are no guidelines or standard operating procedure given either under the said Act or any other Act for fulfilling the requirement of transparency. If the process of implementation of transparency is not carried out through an effective standard procedure, then the entire exercise would be meaningless and redundant.

The various regulatory bodies while discharging their functions have over a period of time evolved their own procedure which they follow to discharge their obligation of following transparency. TRAI has over the years evolved a very effective procedure to ensure that consultation with and participation of the stakeholders takes place right at the beginning of the decision-making process and ends with the authority making public its decision along with the reasons. The entire process is as follows:

(i) Generally, the authority while discharging its functions tries to ensure transparency by first issuing a consultation paper.

(ii) The said consultation paper broadly speaks about the existing regime, regulatory framework and the problems that are arising in the functioning or application or implementation of the provisions of the existing Regulation or tariff order.

(iii) The Authority shares data, information, the nature of the complaints that it is receiving and may in certain cases give possible solutions as it perceives.

(iv) The Authority then frames certain questions on which it invites comments of the stakeholders which includes the public. Sufficient time is given for this purpose. These questions tend to cover the entire gamut of the problem as perceived by the Authority and the possible solutions for the said problems. Invariably, there would always be a question of a general character where the Authority would ask the stakeholders to give comments on any other aspect which it feels is connected to the main issue.

(v) In that sense, the consultation paper is the starting point for consultation and is a kind of a working document to begin with.

(vi) The stakeholders including general public are invited to give their comments in writing which is put up on the website and made public. Thereafter sufficient time is given to the stakeholders to give counter comments on those comments received. These are again put up on the website. Therefore, each stakeholder is aware of the stand that is taken by the other stakeholders.

(vii) The authority then holds open house discussions where exchange of views take place openly between the stakeholders.

(viii) The entire consultation process comprises of the consultation paper, comments, counter comments, open house discussions and data and materials which are shared by the stakeholders.

(ix) Thereafter, the authority after examining the various views of the stakeholders takes a decision. That decision may involve amendment to certain existing provisions or formation of a completely new Regulation or Tariff Order. The authority does not put up its decision for consultation as it would lead to an endless loop of multiple consultations. The authority gives its elaborate reasons for arriving at its decision which is contained in an explanatory memorandum issued along with the final Regulation or Tariff Order.

(x) In certain cases, depending on the nature and complexity of the proposed Regulation, the authority in its wisdom may put up its draft Regulation or Tariff Order for further consultation.10

(xi) Lastly, a perusal of paras 91 and 92 of the judgment of Supreme Court in Cellular Operators Assn. of India v. TRAI11, would show that the authority must give reasons for arriving at its decision and in doing so it must respond in a reasoned manner to the comments that raised significant problems, to explain how the agency resolved any significant problems raised by the comments and to show how that resolution led the agency to the ultimate rule. The agency must articulate a satisfactory explanation for its action including a rational connection between the facts it found and the choices it made. Further it is not necessary that each and every comment must be discussed in great detail but it must broadly take into account what has been stated and the reasons for agreeing or disagreeing with them.

The abovesaid procedure has stood the test of time and can therefore be adopted as a guideline or standard operating procedure for all regulatory bodies to follow while discharging their obligation of ensuring transparency in the decision-making process.

In Cellular Operators Assn. of India v. TRAI12, the Supreme Court felt the need for a Parliamentary enactment that would generally prescribe the normative as well as functional/procedural characteristics of the concept of Transparency and which would be applied to make all subordinate Legislation. It held that: (SCC pp. 758-59, paras 91-92)

91. In Corpus Juris Secundum (March 2016 Update) it is stated:

“Under the informal rule-making requirements of the Federal Administrative Procedure Act, after a federal administrative agency considers the relevant matter presented, it must incorporate in the rules adopted a concise general statement of their basis and purpose. The purpose of the requirement is to enable courts, which have the duty to exercise review, to be aware of the legal and factual framework underlying the agency’s actions. The requirement is a means of holding an agency accountable for administering the laws in a responsible manner, free from arbitrary conduct. The statement is not intended to be an abstract explanation addressed to an imaginary complaint but is intended, rather, to respond in a reasoned manner to the comments received, to explain how the agency resolved the significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule. The statement must identify what major issues of policy were ventilated and why the agency reacted to them as it did and should enable a reviewing court to ascertain such matters. The statement must respond to the major comments received, explain how they affected the regulation, and, where an old regulation is being replaced, explain why the old regulation is no longer desirable.

Agencies have a good deal of discretion in expressing the basis of a rule. The requirement is not to be interpreted over literally, but it should not be stretched into a mandate to refer to all specific issues raised in the comments on the proposed regulations. Although an agency must genuinely consider comments it receives from interested parties, there is no requirement that an agency discuss in great detail all comments, especially those which are frivolous or repetitive. Although the agency need not address every comment received, it must respond in a reasoned manner to those that raise significant problems, to explain how the agency resolved any significant problems raised by the comments, and to show how that resolution led the agency to the ultimate rule. Conclusory statements will not fulfil the administrative agency’s duty to incorporate in adopted rules a concise general statement of their basis and purpose. The agency must articulate a satisfactory explanation for its action, including a rational connection between the facts it found and the choices it made. Under some circumstance, agencies must identify specific studies or data that they rely upon in arriving at their decision to adopt a rule.

Regulations which lack a statement of basis and purpose may be upheld if the basis and purpose are obvious. Moreover, the failure of an agency to incorporate the statement does not render a rule ineffective as to parties to litigation who had knowledge of the rule.

Despite the statutory language mandating that the statement of basis of purposes be “incorporate[d] in the rules adopted,” the statement of basis and purpose does not have to be published at precisely the same moment as the rules. Rather, the rules and statement need only be published close enough together in time so that there is no doubt that the statement accompanies, rather than rationalizes, the rules.”

92. We find that, subject to certain well-defined exceptions, it would be a healthy functioning of our democracy if all subordinate legislation were to be “transparent” in the manner pointed out above. Since it is beyond the scope of this judgment to deal with subordinate legislation generally, and in particular with statutes which provide for rule making and regulation making without any added requirement of transparency, we would exhort Parliament to take up this issue and frame a legislation along the lines of the US Administrative Procedure Act (with certain well-defined exceptions) by which all subordinate legislation is subject to a transparent process by which due consultations with all stakeholders are held, and the rule or regulation-making power is exercised after due consideration of all stakeholders’ submissions, together with an explanatory memorandum which broadly takes into account what they have said and the reasons for agreeing or disagreeing with them. Not only would such legislation reduce arbitrariness in subordinate legislation-making, but it would also conduce to openness in governance. It would also ensure the redressal, partial or otherwise, of grievances of the stakeholders concerned prior to the making of subordinate legislation. This would obviate, in many cases, the need for persons to approach courts to strike down subordinate legislation on the ground of such legislation being manifestly arbitrary or unreasonable.

(emphasis in original)

CONCLUSION

Compliance with principles of transparency in the decision-making process by a statutory/regulatory body assures openness in governance, responsiveness and accountability of the authority making the decision. Consultation with and participation of the stakeholders and the public right at the formative stage of the decision-making, wherein they give their comments and counter comments, makes the process inclusive and instils a certain degree of trust in the functioning of the authority. The fact that the authority considers the views of the stakeholders and then takes a decision supported by reasons which are made public makes the decision more acceptable and weeds out the possibility of discrimination and arbitrariness.

The honourable Supreme Court through its various judgements has recognised the transparent process of decision-making and the right to know as flowing out of Articles 14, 19 and 21 of the Constitution of India. Parliament has also recognised this to be an invaluable right and a part of ensuring open governance.

Unfortunately, despite the fact that the concept of transparency is considered to be laudable and acceptable there is no uniform definition of transparency wherein its scope, extent and limit is clearly defined nor there is any standard operating procedure or guidelines provided for the statutory bodies to follow so as to ensure that the requirements of transparency would be met. Due to lack of definition of transparency wherein its normative characteristics are spelt out and lack of procedural guidelines, the various statutory/regulatory bodies exercise their unguided discretion to comply with the requirements of transparency, thereby making the decision liable to be struck down as manifestly arbitrary and unreasonable.

As transparency is a general concept which is applicable to all public authorities/statutory bodies, it is imperative that Parliament makes a separate independent legislation which clearly spells out the normative characteristics of the concept of transparency, its scope, extent and limits. The said legislation should also provide for the procedural steps that the authorities must conform to as minimum mandatory requirement to discharge the obligation of maintaining transparency in the decision-making process. The said legislation should be made applicable to all public authorities.

In this independent legislation on transparency, Parliament could adopt the scope of transparency as defined under Section 13 of the AERA Act, 2008 (supra) and for the procedural aspect it can adopt the elaborate procedure evolved by TRAI as stated above and the guidelines provided in the US Administrative Procedure Act. It would be also worthwhile to list out the circumstances under which the authority may not be required to follow the process of transparency subject to it following certain conditions like recording reasons in writing for such a departure. The Act may also define the limits of transparency, like by stating to what extent consultation should be carried out as the same cannot be an endless process.

India is a progressive democracy where the citizenry, largely comprising of young generation, is increasingly becoming aware of its rights and is getting well informed. People don’t hesitate to question the decisions of the authorities. Transparency in decision-making process is the norm. As such, it is the need of the hour that Parliament takes upon itself to frame a suitable legislation which not only makes compliance with transparency as a mandatory condition for all public authorities but also clearly defines its normative and functional/procedural characteristics.

———

*The article has been published with kind permission of SCC Online cited as (2021) 10 SCC J-1

† Advocate, Supreme Court of India.

1. Oxford English Dictionary, 2nd Edn., Vol. XVIII, (Clarendon Press, Oxford, New York 1989) p. 419.

2. Aiyar, P. Ramanatha, Advanced Law Lexicon, 3rd Edn., Vol. 4, (Wadhwa and Co., Nagpur 2005) p. 4757.

3. (2002) 2 SCC 333 at p. 373, para 67.

4. (2009) 15 SCC 570 at p. 589, para 71.

5. (1988) 4 SCC 592 at p. 613, para 34.

6. 1981 Supp SCC 87 at p. 275, para 67.

7. (1975) 4 SCC 428 at p. 453, para 74.

8. (2016) 7 SCC 703 at pp. 753-54, paras 86-88.

9. (2011) 15 SCC 1 at pp. 6-7, paras 5-6.

10. (2016) 7 SCC 703 at pp. 751, paras 80-81.

11. As an example, to show the procedure followed by TRAI, the Explanatory Memorandum to “The Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems)(Second Amendment) Regulations, 2020” framed by TRAI can be seen on TRAI Website <https://www.trai.gov.in/release-publication/regulation> Serial No. 8, dt. 1-1-2020, p. 7, paras 3-5.

12. Cellular Operators Assn. of India v. TRAI, (2016) 7 SCC 703 at pp. 758-59, paras 91-92.

Case BriefsHigh Courts

Delhi High Court: While expressing its opinion on the position of an advocate in law, C. Hari Shankar, J., expressed that,

There is, after all, a duty that we all owe, to ourselves, higher than that owed to the client, the brief, the opposite party, or even the court. The conscience of the Counsel should be the last sounding board.

Background

The case set out in the applications, qua the involvement of Mr Singhal, Advocate was that Mr Singhal was a close friend of the family and closely associated with Mr L.R. Kapur, late father of the parties in the disputes.

Senior Counsel, Rajeev Virmani, submitted that his client was completely unaware of the involvement of Mr Singhal in the proceedings.

In 2017, the applicant received a legal notice from Advocate M.K. Dhingra who purported to represent the clients on whose behalf Mr Singhal was appearing.

Following the said notice, CS (OS) 188/2018 was filed by Mr Dhingra before this Court, on behalf of the said parties. Mr Singhal appeared on behalf of Mr Dhingra in the said proceedings. It was only thereafter, Mr Virmani, submitted that the applicants came to know that Mr Dhingra was actually a chamber junior/associate of Mr Singhal.

On learning the above fact, the applicants, in October, 2019, filed IA 3869/2019 (one of the applications being decided here) for a direction to Mr Singhal not to represent the plaintiff in CS (OS) 188/2018.

It was contended that Mr Singhal has acted as a mediator among the parties and the parties, including the applicants in the present case, had exchanged confidences, with respect to the dispute, with Mr Singhal.

Further, Mr Virmani submitted that, despite the pointed allusions in the application to the specific occasions and instances on which Mr Singhal had met the parties and had come to learn of confidential details regarding the dispute and even acted as a mediator, there was no clear denial, to the said facts, in the reply filed by Mr Singhal.

Analysis, Law and Decision

High Court expressed that,

There can be no gainsaying the position in law that an advocate owes, to the litigating public, the Court, his client and to the opposite parties, the highest degree of probity and transparency.

Adding to the above, Court elaborated stating that,

There can be no dispute with the proposition that, where the Court finds that the appearance of an advocate, before it, is not in keeping with the standards expected of the legal profession and is likely to prejudice a fair espousal and prosecution of the lis, the Court can step in and restrain such appearance.

Bench opined that the Court has power to restrain a person from appearing in the proceedings as an advocate on behalf of one or the other party, if it feels that such appearance would be illegal or even improper.

If an advocate has earlier acted, qua the lis between the parties, in judicial or quasi-judicial capacity or even as a mediator, the Court can certainly injunct him from appearing as an advocate in the matter before it. Equally, if the concerned advocate has advised one or the other party or has been a repository of confidences between the parties, the court may, in an appropriate case, direct that he should not represent the parties before the Court. Such directions, if issued, are essentially intended to allow the purity of the stream of justice to remain unsullied, and are, therefore, fundamentally ex debito justitiae.

Reply filed by the defendants through Mr Singhal denied the allegations that Mr Singhal acted as a mediator between the parties or advised the parties in the instant litigations or was a repository of confidence between them.

On perusing the material on record, Court stated that it was not in a position to pass an order of restrain since the standard of material that was required for such order to be passed was lacking. The Court was also of the opinion that Rules 13 and 15 of Volume V, Chapter VI of the Delhi High Court Rules, cited by the applicant, were not applicable to the instant case.

Court also found that Mr Singhal admitted his association with the family and the fact that he had handled cases on their behalf, along with this, he also admitted that in the meeting in which he was associated present case was subject matter of consideration. Though nothing indicated that in connection with the present case, the meeting had taken place in which Mr Singhal participated, irrespective of whether the exact nature of the dispute and the facts were or were not, discussed.

Lastly, the Bench concluded by expressing that,

it would be advisable for Mr Singhal, as a member of a profession which aspires, at all times, to nobility, to introspect, and consider whether his continued appearance in the present matter was in consonance with the highest degree of probity that he, as an advocate, was expected to maintain.

On that note of advice, the application was dimissed.[Sandeep Kaur v. Janak Kapur, 2021 SCC OnLine Del 5211, decided on 6-12-2021]


Advocates before the Court:

Mr. Rajeev Virmani, Sr. Adv. with Mr. Jai Sahai Endlaw, Mr. Shivek Trehan, Mr. Rajat Soni, Mr. Pranay Mohan Govil & Mr. Subhoday Banerjee, Advs. along with Mr. Sandeep Kapur (Plaintiff)

Ms. Niharika, Adv.
Mr. Ashish Kumar, Adv.
Mr. S.C. Singhal, Adv.
Mr. S.C. Singhal, Adv.
Mr. Rajeev Virmani, Sr. Adv. with Mr. Jai Sahai Endlaw, Mr. Shivek Trehan, Mr. Rajat Soni, Mr. Pranay Mohan Govil & Mr. Subhoday Banerjee, Advs. along with Mr. Sandeep Kapur (Defendant 1)

Ms. Niharika, Adv.

Mr. Ashish Kumar, Adv.

Experts CornerTariq Khan

“If you reveal your secrets to the wind, you should not blame the wind for revealing them to the trees.” ~Kahlil Gilbran

Confidentiality is considered as one of the key reasons why parties choose to go for arbitration for settlement of their disputes as they do not want their disputes to be a topic of public discussion. Considering the detailed documents and information that parties exchange in an arbitration, the idea is to protect the sensitive information, trade secrets, intellectual property which may be subject-matter of an arbitration as its disclosure may result in irreparable loss. For the foregoing reason, arbitration proceedings are kept confidential. But is confidentiality practically possible? What is the legal basis of confidentiality? What is its scope and what are the implications if it is breached by a party? In this article the author will shed light on Section 42-A which was introduced by the amendment of 2019 to the Arbitration and Conciliation Act, 1996.

Background

Section 75 of the Arbitration and Conciliation Act, 1996 states that the parties shall keep confidential all matters relating to the conciliation. However, the said provision is not applicable to arbitration proceedings and applies only to conciliation proceedings. Even though there was no statutory mandate in the 1996 Act, there was an implied duty of confidentiality for various reasons including protection of sensitive information or intellectual property, etc., reputation of parties in public, protection from potential claims in similar matters, no intervention of unrelated parties, etc.

In 2019, for the first time, a provision relating to confidentiality was incorporated in the Act based on the recommendation of Justice B.N. Srikrishna Committee submitted a report and gave certain suggestions for making arbitration more robust in India. The said recommendation was accepted and a provision has now been introduced by Arbitration and Conciliation (Amendment) Act, 2019  that expressly mentions the duty of confidentiality and reads as follows:

42-A. Confidentiality of information.— Notwithstanding anything contained in any other law for the time being in force, the arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except award where its disclosure is necessary for the purpose of implementation and enforcement of award.

It is noteworthy that Section 42-A is a non obstante clause which means that it deprives the parties of their autonomy and this provision supersedes any other law. As per the language of the section, the only exception to confidentiality is when the disclosure of the arbitral record is done for the limited purpose of implementation and enforcement of award.

Section 42-A: Myth or reality?

As per the language of Section 42-A, only the award can be disclosed for the limited purpose of its implementation and enforcement. Surprisingly, the language of the section does not talk about disclosure of the award for the purpose of challenge to the arbitral award under Section 34 of the Act. It is not uncommon for parties to approach the court under Section 29-A for extension of time period for passing of an award. In that case, the relevant record of arbitration is often filed along with the application for extension. Thus, there seems to be a practical problem in implementation of Section 42-A considering the fact that it is a non obstante clause and only permits disclosure of award that too for implementation and enforcement of award. Let us take some other scenarios, where a party is seeking interim measures under Section 9 from the court, a party files an application for termination or substitution of the arbitrator under Sections 14 and 15 or files an appeal under Section 37 against an order of the tribunal, even in these cases the arbitral record is filed before the court, that makes Section 42-A impractical and otiose.

Confidentiality v. Transparency

Often this issue has been a topic of discussion as to whether transparency is more important or confidentiality. It can be argued that the general public has more faith in the court proceedings as there is transparency involved in the process and the court proceedings are accessible to the general public whereas arbitral proceedings are private and are not accessible to third parties. Neither the proceedings nor the award passed by the arbitrator is accessible to any third party. Whereas the judgment of the court is pronounced in open court and available for public. Moreover, transparency ensures fairness and builds the trust of stakeholders in arbitration. Parties often complain that there is no accountability on part of the arbitrator as the proceedings take place in a closed room and as a result, the credibility of arbitrators is often challenged in court. For the said reasons, many people opine that arbitral awards be published as it will cement the faith of the parties in arbitration and at the same time there will be a development of jurisprudence in arbitration. Arbitrators will be careful while passing awards as they would be concerned about their public image and quality of arbitral awards will be maintained. Publication of awards will make it easier for parties to nominate an arbitrator based on his reputation. However exciting the idea of transparency may sound but it cannot be ignored that confidentiality is one of the key features which makes arbitration attractive to parties as a mode of dispute resolution thereby, making it difficult to implement the idea of publication of awards.

Privacy and Confidentiality

Sometimes privacy and confidentiality are used interchangeably when in fact these two concepts are different. Privacy in arbitral proceedings would mean that no third party can enter the arbitration proceedings and cannot witness the same as these proceedings take place in a private set-up in a closed room. In other words, privacy only means that arbitration proceedings cannot be attended by a third party who is not a party to the dispute except the counsels, witnesses and the arbitrator. Confidentiality on the other hand means that the content, documents, information which is adduced during the proceeding and the award are to be kept confidential and cannot be published or disclosed by any party.

Outsiders in the Arbitration Proceedings

Apart from the parties to the arbitration proceedings, there are outsiders who are strangers to the agreement but still sit in the arbitration proceedings e.g. counsels of the parties, witnesses, stenographers/transcribers, tribunal secretary, translators, etc. They are not governed by the arbitration agreement and have access to confidential information produced in the arbitration. Section 42-A fails to address this concern as it remains silent on the duty of these third parties to keep the arbitral record confidential. The language of the section only imposes confidentiality on the parties, arbitrator and the arbitral institution.

International Perspective

The UNCITRAL Model Law is silent on confidentiality. In the absence of any international rules prescribing confidentiality in arbitral proceedings, there has been a difference of opinion between various jurisdictions on the issue whether arbitral proceedings are confidential? Courts in Australia and USA have rejected the idea of an implied duty of confidentiality in arbitration and held that there cannot be a presumption of confidentiality in arbitration. Norway is another jurisdiction which has an express statutory provision which states that there is no duty of confidentiality in arbitration proceedings unless the parties otherwise agree. On the other hand countries like UK and France have recognised the concept of implied confidentiality as there is no express statutory provision regarding confidentiality.

Conclusion

The language of Section 42-A fails to take into consideration the concept of party autonomy which permits parties to decide whether they wish to keep the arbitral proceedings confidential or not. It can be argued that no statutory provision can impose confidentiality on the parties in an arbitration. Further, Section 42-A has been worded in such a way that it does not leave scope for parties to voluntarily consent for disclosure of certain documents and the exceptions in the provision fail to take note of the mandatory legal disclosures. The provision also does not provide the consequences of breach of this provision. The fine print of Section 42-A will render it otiose and as a result, the precious time of the court will be lost in interpreting this loosely-worded provision.

* by Tariq Khan, Principal Associate (Advani & Co.).

Hot Off The PressNews

The experimental live streaming of the First Court of the Gujarat High Court started today after the Chief Justice of High Court of Gujarat, Justice Vikram Nath passed the order for the same.

The order read:

“… with a view to effectuating and broadening the implementation of Open Court concept even during the virtual hearings of the Court, this High Court has already taken up on administrative side, to work out the modalities that can be adopted for giving access to anyone who wishes to watch the Court proceedings in live.”

The court proceedings are being telecasted live, purely on experimental basis and the aspect of continuing with or adapting the modality of live court proceedings will be decided based on the outcome of this trial starting October 26, 2020 and any other trial of any other modality that may be taken up in due course.

The link for the live streaming is accessible from the High Court website and the YouTube Channel of the High Court of Gujarat. The link will be updated every evening of the previous working day.

On September 26, 2018, A Bench comprising of CJ Dipak Misra and A.M. Khanwilkar and Dr D.Y. Chandrachud, JJ directed that the proceedings of constitutional importance having an impact on the public at large or a large number of people should be live streamed. Read more


*Image Courtesy: YouTube

Read the full text of the Press Release here

Read the full report on the Supreme Court ruling on Live Streaming of proceedings here

Hot Off The PressNews

The Ministry of Finance has taken a number of steps to eliminate fraudulent banking practices. This was stated by Shri Anurag Thakur Minister of State for Finance & Corporate Affairs in a written reply to a question in the Rajya Sabha on 19-11-2019. He stated that steps include, inter-alia, the following:

  1. Government has issued “Framework for timely detection, reporting, investigation, etc. relating to large value bank frauds” to Public Sector Banks (PSBs) for systemic and comprehensive checking of legacy stock of their non-performing assets (NPAs), which provides, inter-alia, that—
  • all accounts exceeding Rs. 50 crore, if classified as NPAs, be examined by banks from the angle of possible fraud, and a report placed before the bank’s Committee for Review of NPAs on the findings of this investigation;
  • examination be initiated for wilful default immediately upon reporting fraud to RBI; and
  • report on the borrower be sought from the Central Economic Intelligence Bureau in case an account turns NPA.
  1. Fugitive Economic Offenders Act, 2018 has been enacted to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts. The act provides for attachment of property of a fugitive economic offender, confiscation of such offender’s property and disentitlement of the offender from defending any civil claim.
  2. PSBs have been advised to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore and, decide on publishing photographs of wilful defaulters, in terms of the instructions of RBI and as per their Board-approved policy and to strictly ensure the rotational transfer of officials/employees. The heads of PSBs have also been empowered to issue requests for issue of Look Out Circulars.
  3. For enforcement of auditing standards and ensuring the quality of audits, Government has established the National Financial Reporting Authority as an independent regulator.
  4. Instructions/advisories have been issued by Government to PSBs to decide on publishing photographs of wilful defaulters, in terms of RBI’s instructions and as per their Board-approved policy, and to obtain a certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore.
  5. In order to bring transparency and accountability in the larger financial system, bank accounts of 3.38 lakh inoperative companies were frozen over the last two financial years.

Ministry of Finance

[Source: PIB]

Business NewsNews

DIN System of CBIC comes into force

This path-breaking DIN system in indirect tax administration has been created as per the direction of Union Minister for Finance and Corporate Affairs Nirmala Sitharaman and from now onwards any CBIC communication will have to have a Documentation Identification Number. The government has already executed the DIN system in the direct tax administration. This step is to further the Government’s objectives of bringing transparency and accountability in the indirect tax administration also through the widespread use of information technology.

CBIC Chairman Shri Pranab K. Das said, “This measure would create a digital directory for maintaining a proper audit trail of such communications. Now all such specified communications with DIN would be verifiable on the online portal cbicddm.gov.in and any communication which is not in conformity with the prescribed guidelines as per the DIN related Circulars dated 05.11.2019 shall be treated as invalid.”

It would be pertinent to mention here that while specifying such exceptional circumstances the CBIC Circulars related to DIN dated 05.11.2019 say that whenever any such manual communication would be issued, it would be necessarily required to specify reason of issuing such a communication without DIN and written approval of the competent authority shall be obtained within 15 days.

CBIC has specified that any communication issued manually under exceptional circumstances would have to be regularised on the system within 15 working days of its issuance.

The CBIC, in exercise of its power under section 168(1) of the CGST Act, 2017/ Section 37 of the Central Excise Act, 1944/ Section 151A of the Customs Act, 1962, is implementing the system for electronic generation of a Document Identification Number (DIN) for all such communications sent by its offices to taxpayers and other concerned persons.


Ministry of Finance

[Press Release dt. 07-11-2019]

Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): Bimal Jhulka (Information Commissioner), disposed of an appeal expressing displeasure in regard to the way RTI Applications were being responded and further stated that,

“There is complete negligence and laxity in the public authority in dealing with the RTI applications. It is clear that such matters are being ignored and set aside without application of mind which reflects disrespect towards the RTI Act, 2005 itself.”

The facts of the present matter are that, the appellant vide his RTI application had sought information on few points in respect to NBCC, regarding the list with details of allottees who had been allotted covered parking space at NBCC, Vibgyor Towers as on 30-06-2006 and 25-02-2010; total number of covered parking space allotted and the vacant, if any and other issues related thereto.

CPIO informed the appellant that the RTI application was forwarded for seeking suitable information from the PIO concerned under the provisions of Sections 5(4) & 5(5) of the RTI Act, 2005. Dissatisfied by the said response, the appellant approached the FAA.

Further, the appellant reiterated the contents of the RTI application and stated that the information sought had not been received by him, till date. Respondent-NBCC submitted that on receipt of the RTI application, an interim reply was provided to the appellant. Respondent also added to its submissions that the CPIO, NBCC, Kolkata had to provide the information within the stipulated time and notice of hearing was also addressed to them.

Appellant while contesting the above averments of the respondent submitted that he had not received any information till date, neither from the CPIO nor from the FAA, which was in contravention to the provisions of RTI Act, 2005.

Respondent while explaining the background of the matter informed that the Flats and Parking in the said Tower were also sold on the basis of the open lottery amongst the Applicants. To this, the appellant contested that so far he had not received any such letters regarding draw of the lottery for covered/ open parking. He also added that he desired all the information relating to the publication of draw of lottery/selection of open and covered parking/ announcement, etc.

However, the respondent agreed to forward the entire correspondences held with them to the appellant once again. On being queried by the Commission “whether the details relating to the allotment of flats/building plan/allottees details/procedure followed for allotment of covered parking and designation of the competent authority having power of deviating the Rules,” respondent replied in the negative and agreed to put it in the public domain.

Commission’s Observation

Commission while referring to the decision of Mujubur Rehman v. CIC, WP (C) 3845 of 2007, stated that timely response is the essence of RTI mechanism enacted to ensure transparency and accountability in the working of Public Authorities.

With regard to providing a clear and cogent response to the Appellant, the Commission referred to the decision of JP Aggarwal v. Union of India, WP (C) 7232 of 2009.

Commission observed that, a voluntary disclosure of all information such as the details relating to allotment of flats/building plan/ allottees detail/ procedure followed fro allotment of covered parking/name and the designation of the competent authority having power of deviating the Rules that ought to be displayed in the public domain should be the rule and members of public who having to seek information should be an exception.

Open Government, which is the cherished objective of the RTI Act, can be realised only if all public offices comply with proactive disclosure norms. Section 4(2) of the RTI Act mandates every public authority to provide as much information suo-motu to the public at regular intervals through various means of communications, including the internet, so that the public need not resort to the use of RTI Act.”

Supreme Court decision in CBSE v. Aditya Bandopadhyay, (2011) 8 SCC 497, was also cited in which it stated that,

“The right to information is a cherished right. Information and right to information are intended to be formidable tools in the hands of responsible citizens to fight corruption and to bring in transparency and accountability.”

Adding to the above, Commission in regard to the larger public interest involved in the matter, referred to the decision of Supreme Court in Bihar Public Service Commission v. Saiyed Hussain Abbas Rizwi, (2012) 13 SCC 61, while explaining the term “Public Interest”.

Commission expressed its displeasure on the casual and callous approach adopted by the respondent in responding to the RTI application. It was felt that the conduct of the Respondent was against the spirit of the RTI Act, 2005 which was enacted to ensure greater transparency and effective access to the information.

Direction issued by the Commission pertaining to the matter

Commission directed the respondent to furnish a set of entire correspondences held with them to the appellant as per the provisions of the RTI Act, 2005 within a period 15 days.

CPIO, Kolkata was warned to be extremely careful and vigilant in handling RTI petition in future, failing to which Commission would initiate penal action under Section 20(1) of the RTI Act, 2005.

It was also noted that FAA had not acted in accordance with the provisions of RTI Act, 2005 and therefore is advised to be alert and cautious in the implementation of the RTI Act, 2005 with due diligence and care.

Commission also instructs the Respondent Public Authority to convene periodic conferences/seminars to sensitize, familiarize and educate the concerned officials about the relevant provisions of the RTI Act, 2005 for effective discharge of its duties and responsibilities.

Thus, in view of the above terms, the appeal stands disposed. [Kushal Saha v. CPIO, NBCC, 2019 SCC OnLine CIC 1148, decided on 13-09-2019]

Legislation UpdatesNotificationsTaxation

With a view to bringing greater transparency in the functioning of the tax-administration and improvement in service delivery, almost all notices and orders of Income Tax Department are being generated electronically on the Income Tax Business Application (ITBA) platform. However, it has been brought to the notice of the Central Board of Direct Taxes (CBDT) that there have been some instances in which the notice, order, summons, letter and any correspondence (hereinafter referred to as “communication”) were found to have been issued manually, without maintaining a proper audit trail of such communication.

In order to prevent such instances and to maintain proper audit trail of all communication, the CBDT has, vide Circular No.19/2019 dated 14.08.2019 laid down parameters specifying the manner in which any communication issued by any income-tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification, approval etc. to the assessee or any other person will be dealt with. All such communication issued on or after the 1st of October, 2019 shall carry a computer-generated Document Identification Number (DIN) duly quoted in the body of such communication.

CBDT has also specified exceptional circumstances where the communication may be issued manually but only after recording reasons in writing and with the prior written approval of the Chief Commissioner / Director General of Income-Tax concerned. In cases where manual communication is required to be issued, the reason for the issue of manual communication without DIN has to be specified alongwith the date of obtaining written approval of the Chief Commissioner / Director General of Income-Tax in a particular format. Any communication which is not in conformity with the prescribed guidelines shall be treated as invalid and shall be deemed to have never been issued. Further, CBDT has also laid down the timelines and procedure by which such communication issued manually will have to be regularised and intimated to the Principal Director General of Income-tax (Systems).

            In addition to the above, in all pending assessment proceedings, where notices were issued manually, prior to issuance of the above referred Circular, all such cases would be identified and the notices so sent would be uploaded on ITBA by 31st October, 2019.


[Source: PIB]

Press Release dt. 14-08-2019

Ministry of Finance

Cabinet DecisionsLegislation Updates

The Union Cabinet, chaired by the Prime Minister Narendra Modi has approved National Mineral Policy 2019. 

Benefits:

The New National Mineral Policy will ensure more effective regulation.  It will lead to sustainable mining sector development in future while addressing the issues of project affected persons especially those residing in tribal areas

Objective:-

The aim of National Mineral Policy 2019 is to have a more effective, meaningful and implementable policy that brings in further transparency, better regulation, and enforcement, balanced social and economic growth as well as sustainable mining practices.

Details:

The National Mineral Policy 2019 includes provisions which will give boost to mining sector such as

  • introduction of Right of First Refusal for RP/PL holders,
  • encouraging the private sector to take up exploration,
  • auctioning in virgin areas for composite RP cum PL cum ML on revenue share basis,
  • encouragement of merger and acquisition of mining entities and
  • transfer of mining leases and creation of dedicated mineral corridors to boost private sector mining areas.
  • The 2019 Policy proposes to grant status of industry to mining activity to boost financing of mining for private sector and for acquisitions of mineral assets in other countries by private sector
  • It also mentions that Long term import export policy for mineral will help private sector in better planning and stability in business
  • The Policy also mentions rationalize reserved areas given to PSUs which have not been used and to put these areas to auction, which will give more opportunity to private sector for participation
  • The Policy also mentions to make efforts to harmonize taxes, levies & royalty with world benchmarks to help private sector

Among the changes introduced in the National Mineral Policy, 2019 include the focus on make in India initiative and Gender sensitivity in terms of the vision.  In so far as the regulation in Minerals is concerned, E-Governance, IT-enabled systems, awareness and Information campaigns have been incorporated.  Regarding the role of state in mineral development online public portal with provision for generating triggers at higher level in the event of delay of clearances has been put in place.  NMP 2019 aims to attract private investment through incentives while the efforts would be made to maintain a database of mineral resources and tenements under mining tenement systems. The new policy focusses on use coastal waterways and inland shipping for evacuation and transportation of minerals and encourages dedicated mineral corridors to facilitate the transportation of minerals.  The utilization of the district mineral fund for equitable development of project affected persons and areas. NMP 2019 proposes a long term export-import policy for the mineral sector to provide stability and as an incentive for investing in large scale commercial mining activity.

The 2019 Policy also introduces the concept of Inter-Generational Equity that deals with the well-being not only of the present generation but also of the generations to come and also proposes to constitute an inter-ministerial body to institutionalize the mechanism for ensuring sustainable development in mining.

Background:

National Mineral Policy 2019 replaces the extant National Mineral Policy 2008 (“NMP 2008”) which was announced in the year 2008. The impetus to review NMP 2008 came about by way of a direction from the Supreme Court vide its judgment dated 02.08.2017 in Writ Petition (Civil) No. 114/2014 entitled Common Cause v/s Union of India & Others.

In compliance of the directions of the Apex Court, the Ministry of Mines constituted a committee on 14.08.2017 under the chairmanship of Dr. K Rajeswara Rao, Additional Secretary, Ministry of Mines to review NMP 2008. The Committee had members from Central Ministries/ Departments, State Governments, Industry Associations and Subordinate offices of Ministry of Mines. The Committee also invited concerned NGOs and Institutional Bodies to take part in the deliberation of the Committee meetings. The Comments/suggestions from the stakeholders were also sought. Based on the deliberations held at Committee meetings and stakeholders’ comments/ suggestions, the Committee Report was prepared and submitted to the Ministry of Mines.

The Ministry of Mines accepted the committee Report and invited the comments/ suggestions of the stakeholders as part of the PLCP process. Based on the received comments/ suggestions received in PLCP process and the comments/ suggestions from the Central Ministries/ Departments the Ministry of Mines finalized the National Mineral Policy 2019.

[Press Release dt. 28-02-2019]

Cabinet

Case BriefsSupreme Court

Supreme Court: In the light of serious irregularities in the selection process of appointment of assistant teachers in government lower primary schools, the Bench of AK Goel and RF Nariman, JJ directed that for the purity of selection to the public posts, as far as possible the selection process conducted by the selection bodies, especially the State Public Service Commissions and the State Selection Boards, is videographed.

Directing the Registry to send a copy of the order to Department of Personnel and Training (DoPT), Ministry of Personnel, Public Grievances and Pensions, for being forwarded to the concerned authorities for compliance, the Bench further directed:

“at examination centres as well as interview centres CCTV cameras should be installed to the extent viable. Footage thereof may be seen by an independent committee of three members and report of such committee may be placed on the website concerned.”

The Court gave the said order when the irregularities in the State of Meghalaya was brought to it’s notice. The Court noticed that such incidents were being reported in several cases as it had recently dealt with such a matter in Avinash C. v. State of Karnataka, 2018 SCC OnLine SC 330, decided on 4.4.2018. [State of Meghalaya v. Phikirba Khariah, 2018 SCC OnLine SC 336, order dated 06.04.2018]

Case BriefsInternational Courts

European Court of Justice: While deciding upon the issue of access to documents drawn up by Parliament which contain information concerning the positions of the institutions on the ongoing co-decision procedures with particular emphasis on the multicolumn tables drawn up in connection with ‘trilogues’, the 5-Judge Bench of the Court headed by M. Van der Woude, President, held that the work of the ‘trilogues’ constitute a decisive stage in the legislative process which entails exemplary adherence to the public’s right to access that work and the strict application of the exceptions provided for in the regulation regarding public access to European Parliament, Council and Commission documents. Thus the European Parliament must grant access, on specific request, to documents relating to ongoing trilogues.

A ‘trilogue’ is an informal tripartite meeting in which the representatives of Parliament, the Council and the Commission take part. The aim of such exchanges is to reach a prompt agreement on a set of amendments acceptable to Parliament and the Council, which must subsequently be approved by those institutions in accordance with their respective internal procedures. The ‘trilogues’ generally contain four columns: the text of the Commission’s legislative proposal; the position of Parliament as well as the amendments that it proposes; the position of the Council and the provisional compromise text or the preliminary positions of the Presidency of Council in relation to the amendments proposed by Parliament. The applicant Emilio De Capitani requested for access to documents drawn up by Parliament or made available to it which contain information concerning the positions of the institutions on ongoing co-decision procedures. The request related, in particular, to the multicolumn tables drawn up in connection with ‘trilogues’. However Parliament refused to disclose the fourth column taking the view that the fourth column of the documents contains provisional compromise texts and preliminary positions of the Presidency of Council, the disclosure of which would seriously undermine the decision-making process of the institution.

Perusing the facts of the case, the General Court observed that fourth column of trilogue tables concern an ongoing legislative procedure and emphasize that the principles of publicity and transparency are inherent to the EU legislative process and that no general presumption of non-disclosure can be upheld on the basis of the nature of a legislative procedure. It was furthermore observed that if citizens are to be able to exercise their democratic rights, then they must be in a position to follow in detail the decision-making process within the institutions taking part in the legislative procedures. The General Court thus annulled the decision of the European Parliament which refused the access of the fourth column of the ‘trilogues’. [Emilio De Capitani v. European Parliament, T-540/15, decided on 22.03.2018]

Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): While strongly emphasizing the importance of judicial accountability and transparency, the Information Commissioner Prof. M. Sridhar Acharyulu has directed the Central Public Information Officer of Supreme Court and the Ministry of Law and Justice to disclose the action taken on complaints made against former Chief Justice of India Altamas Kabir.

The appellant had filed RTI applications seeking the copy of the complaints received against former CJI Altamas Kabir, including complaints of Justice VR Krishna Iyer and Mr. Furquan; information as to the action taken on all such complaints and action taken to probe the leakage of Supreme Court verdict in Christian Medical College, Vellore v. Union of India, (2014) 2 SCC 305, before its pronouncement; and the copy of complaints received against any other sitting or retired Judge. The CPIO, Department of Legal Affairs, stated that the representation of Mr. Furquan was forwarded to Chief Justice of India for appropriate action. Similarly, the complaints received against serving/retired judges of the Supreme Court and High Courts were also forwarded to the Supreme Court and High Courts concerned for action and as originals were forwarded, they did not have those copies. He also explained that the disclosure of names of serving or retired judges, against whom complaints were made, might have far reaching consequences like demoralizing the Judges.

The CIC noted that though it could be unreasonable to give copies of frivolous complaints, but if any complaints were taken up for further probe after prima facie inquiry, it would be in public interest to disclose the copies of the complaints along with the status of action taken. The Commission thus directed the Ministry of Law and Justice to disclose the action taken on complaints made against former CJI Altamas Kabir and the action taken on the leakage of the judgment. It further directed the Ministry to inform the appellant as to the number of complaints made against former Judges that were received and forwarded, without indicating the names and contents; the current status of the Judicial Standards and Accountability Bill, the National Litigation Policy and the new Memorandum of Procedure, 2016-17; and the response to Government’s suggestion to create redressal mechanism for grievances in Supreme Court and High Courts. The Commission also directed the CPIO of Supreme Court to inform the appellant, the action taken on the representation of Mr. Furquan, and the number of complaints received from the Ministry of Law and Justice, without indicating the names or contents. [Subhash Chandra Agrawal v. Central Public Information Officer, 2017 SCC OnLine CIC 592, decided on 03.05.2017]