The Macro Problems of Microfinance Industry in India - Part I

The first quarter of this month has brought to the frontline the traditional non ending tussle between the judiciary and the executive. The proponents of constitutional theory of separation of power have criticized the recent orders by Supreme Court in Black Money Case, Salva Judum Case, 2G Scam Case, etc. as clear instances of judicial overreach while others have shown their respect to these new horizons of judicial activism. In the situation where Center is witnessing a tough time in keeping the ball in its Court, the recent criticisms raised by the Andhra Pradesh government on the proposed Microfinance legislation by the Union Government has depicted that the Union also has to pass the constraints posed by federal structure of Indian polity. It would be an interesting story from herein to observe the Union’s moves when it is getting setbacks from two governance models of constitutional framework of India.

The release of recent draft of Micro Finance Institutions (Development and Regulation) Bill, 2011 by Finance Ministry marks a new development which once again depicts the overenthusiastic approach of both the Center and the State to regulate the Rs. 20,000 crore microfinance industry in India. It would be worth shooting aimlessly without acquainting the reader with background of this battle. I propose to cover different issues including but not limited to the background of MFI crisis, the government’s response to handle this crisis, quest for regulation of MFI sector and analysis of proposed Bill in a series of posts.

Microfinance as a genre of microcredit denotes a practice of providing small, working capital loans and other financial services to poor individuals who are unable to obtain access to commercial sources of credit. Once considered as next big thing in terms of investment, the definition of microfinance has undergone a significant change in the recent era. There has been a shift in the orientation of microfinance institutions from ‘reaching the unreached’ with not for profit model to ‘commercial banking activities’ with a for-profit model. In this process, much more than the profits generated by these institutions and the heated arguments accumulated by both critics and enthusiastic of microfinance institutions, it is the poor and vulnerable members of the society who have witnessed the agony of paying high interest rates and ostensibly making their loans ‘evergreen’. The plight of aam aadmi in the State of Andhra Pradesh captured the front page of newspapers across the nation wherein allegations were made that the strict and often barbaric debt recovery methods used by the MFIs, and their explosive growth rates since the beginning of the decade, had led as many as 200 borrowers to end their lives. Soon the State intervened with passing of the Andhra Pradesh Microfinance Institutions (Regulation of Money Lending) Ordinance, 2010, which restricted the freedom of operation of the MFIs in the state and MFIs witnessed a sharp fall in loan recovery. To address this situation and to provide relief to both common man and MFIs, the Central regulator – the Reserve Bank of India (RBI) constituted a committee under the chairmanship of Mr. Y.H. Malegam to look into issues relating to MFIs which submitted its report in January 2011. The report essentially mooted for the self-regulatory framework for MFI sector and provided an exhaustive list of recommendations which received mixed response from the critics and the enthusiastic supporters of microfinance. Andhra Government officials went public by stating that they are not bound by the recommendation posed by the committee and they would continue to regulate the microfinance sector by the State law only. Once again the Center responded to the situation with the release of Draft MFI Bill, 2011. The next post would continue the discussion on the new bill and the controversy involved therein.

Ground Realities

The Supreme Court recently in the case of Nandini Sundar and Ors. v. State of Chhattisgarh declared the appointment and arming of Special Police Officers (SPOs) by the State of Chhattisgarh for counter insurgency purposes in naxal affected areas as unconstitutional. Despite the judgment being criticized by many as being a “judicial lecture” to the executive, it has far reaching ramifications for the state. The debate about the separation of powers and to what extent the court should be willing to enter the domain of executive policy is an endless one. This judgment needs to be appreciated in the light of the of the insight and accuracy that the court has exhibited in terms of clearly discerning for itself the real purposes of the entire scheme of the State of Chhattisgarh in the appointment if SPOs in the affected areas. At the outset it needs to be understood that it was a writ petition in the Supreme Court, hence, the evidence of particular facts can be taken only on affidavit. Therefore the court is always constrained as regards both the accuracy as well as the sufficiency of facts to decide a case a particular case. Yet the Supreme Court quite amazingly could discover the true stand of the Government in relation to the whole structure that it had put in place, which conveniently has been referred to “Salwa Judum”. The claim of the state was that the SPOs were recruited only for the purposes that they could act as “guides, spotters and translator” and would work as a source of intelligence. The essence of the argument was that the SPOs would only have roles in the nature of assistance to the main security forces in the above manner and that they would not be deployed in the main battle field against the naxalites/extremists. To a question by the court as to why providing the SPOs with firearms was necessary considering their non combative role, the state replied that it was for their “self- defence”. The court keeping in mind the fact that in national security matters “the court usually does not seek to interfere in security considerations”, however, its intervention is imperative so as to “safeguard constitutional values and goals, and fundamental rights such as equality, and right to life.” The court then reading from the very affidavit submitted by the state pointed out the fact that 170 SPOs have been killed and more than 117 of them have been injured in the last five years itself belies the claim of the state that the role of the SPOs were merely confined to non-combative operations. Furthermore the court was quick to analyse the reality that in attacks on relief camps set up by the state in various naxal affected areas the SPOs would undoubtedly get involved in what it termed as “fierce battle” with the naxalites. In the light of this fact the court held in very strong terms that the whole purposes of recruiting poor tribal youngsters as SPOs was to have them as “cannon fodder in the killing fields of Dantewada and other districts of Chattisgarh.” This court asserted was a violation of article 21 of the constitution in as much as their lives were put in direct danger by the state without putting in adequate safeguards in place. The fact that these tribals were not even given proper training for combative roles was an outright abdication of the responsibility of the stare which is to ensure that the life and liberty of its citizens were protected. Insufficiency of training coupled with the imminent danger from the operations they were subjected to was a total negation of constitutional values. Inspite of the fact that the SPOs were expected to perform all the duties of the regular police officers, be subject to all the liabilities and disciplinary codes, as members of the regular police force, and yet receive only an “honorarium” from the central government. They are completely deprived of all the other benefits which the regular forces are entitled to receive. The court could clearly see that “issues of finance have overridden other considerations such as effectiveness of such SPOs and of constitutional values.” This was held to be an outright violation of article 14 of the constitution which guarantees equal treatment to all. Furthermore the fact that these young tribals were being subjected to the same level of danger as any other member of the regular force who have much better training and education and possess much better capacities to deal with counter insurgency operations, was tantamount to treating “unequals as equals”, which is an outright violation of article 14 of the constitution.

It is submitted that the 58 page opinion of the Court though appearing to be rhetoric in the beginning, has not been welcomed in the manner it should have been. Under the circumstances where the Union had forgotten its constitutional mandate under Article 355 of the Constitution, the Court was very well justified in bringing the ground realities to the forefront and to maintain the rule of law. Critics have failed to appreciate the context in which Court remarked that “the primordial value is that it is the responsibility of every organ of the State to function within the four corners of constitutional responsibility. That is the ultimate rule of law.” It would be very interesting story now when this attitude of the Court is being characterized by the State as ideological rather than a step forward to maintain the rule of law. Reports suggest that the Chief Minister of Chhattisgarh has already hinted on filing review petition against Salwa Judum decision.

Karnataka Assembly Crisis

The author expresses his regret for going beyond the word limit; however, the exigency of the matter compelled him to do so.

The ongoing political outcry in the State of Karnataka has stunned the whole nation and the vibes of this political deadlock has brought the constitutional issues regarding the authority of the Speaker of the assembly and Anti defection law at the forefront. The disqualification of 16 MLAs (11 BJP and 5 independents) by the Speaker K.G. Bopaiah ahead of the trust vote on October 11, 2010 has taken the legal and political community aback. Eminent politicians, jurists and commentators posit themselves on opposing extremes of the academic spectrum on this point, and recent split judicial pronouncements by Karnataka High Court add to the confusion. Being students of Constitutional Law, it is imperative as well as essential for us to gauge the validity of these political actions on the touch stone of the Constitution. This post would delve into the contentious issue of law regarding the disqualification of MLAs. In doing so, the first part would provide a brief background to the present controversy and then it moves to trace the constitutional provisions with regards to the disqualification of MLAs. The next part would examine the case law jurisprudence revolving around the same issue.

Part I: Background of the Controversy

The saga begins on October 6, 2010 when 16 MLAs approached the Governor H.R. Bhardwaj whereby they expressed their lack of confidence in the government on being aggrieved by the alleged disillusion with the functioning of the government headed by B.S. Yediyurappa. It was alleged that the government was responsible for widespread corruption, nepotism, favourism, abuse of power and misuse of government machinery. With these reasons they asserted that they have withdrawn their support to this government in their letter on the same date. Taking note of this dissatisfaction, the Governor addressed a letter to Chief Minister on the same date wherein he requested the CM to prove his majority on the floor of the house. At this juncture, it is pertinent to note that the said floor test has been laid down by the Supreme Court in S.R. Bommai Case which was subsequently followed in Rameshwar Case. Subsequently, the CM filed a petition under Rule 6 of the Karnataka Legislative Assembly (Disqualification of Members on grounds of Defection) Rules, 1986 praying for the disqualification of 13 MLAs. The Speaker accepted this petition and passed the impugned order dated October 10, 2010 whereby 11 MLAs were disqualified. The story took an interesting turn when the questions arose as regards to the said disqualification wherein it was alleged in various media reports that the sole purpose of such disqualification before the trust vote was to bring down the strength of the house to 208 and thus it was aimed at facilitating the comfortable win for Yediyurappa’s government. Aggrieved by this, the MLAs challenged their disqualification in the Karnataka High Court. The court pronounced a split verdict on the issue on October 18. Chief Justice J.S. Khehar upheld the action of the speaker and Justice N. Kumar set aside the order of the speaker calling it unconstitutional. The matter has now been listed for hearing before a third Judge on October 20.

Having dealt with the factual background leading up to the passing of the split decision by High Court, I shall now venture to deal with the law on disqualification.

Part II: Constitutional Provision Regarding Disqualification Of Members

The 16 MLAs were disqualified by the speaker under the 10^th schedule of the Constitution on grounds of defection. Article 191 read with the paragraph 2 of 10^th schedule of the constitution lists two grounds on which a member of a house “belonging to any political party” can be disqualified. First, “if he has voluntarily give up his membership of such political party”, Second, “if he votes or abstains from voting contrary to any direction issued by the political party.” In the present context, it can be very well argued on behalf of the MLAs that their action of approaching the governor to express their grievance against the government did not amount to voluntarily giving up their membership. As Justice J.S. Khehar put forth, the MLAs merely “dissented”, it was not “dissidence.” The right to dissent has an enormous bearing on democracy. Democracy is not about “who is ruling” but “who is in the opposition.” Merely on grounds of dissenting it would indeed be unjust to remove the rebel MLAs.

Part III: Judicial Pronouncements On Disqualification of Members

Similar issue had plagued and perplexed the judicial minds in the case of Ravi S. Naik & Sanjay Bandekar v. Union of India & others wherein the Court held that the words “voluntarily giving up membership” do not mean “resignation”. The court had categorically clarified that “A person may voluntarily give up his membership of a political party even though he has not tendered his resignation from the membership of that party. Even in the absence of a formal resignation from membership an inference can be drawn from the conduct of a member that he has voluntarily given up his membership of the political party to which he belongs.” An inference has to be made by the speaker on the basis of evidence supporting the same. In the present case Mr. Bopaiah had send show cause notices to all the MLAs asking them to explain why action should not be taken against them. Here the procedure was duly followed as envisaged by Rule 6 and 7 of KLA Rules, 1986. The MLAs were given a chance to explain their positions by adducing documents. However, the MLAs were given just 4 days to file their replies, whereas the Rule 7(3) of Karnataka Assembly provide for seven days time. Therefore it would indeed be difficult for the Court to classify the action of the speaker as unconstitutional. The speaker was well within the ambit of the law when he passed the order of disqualification. Further in the case of Sri Rajendra Singh Rana & Ors. V. Swami Prasad Maurya & Ors, the Supreme Court took a liberal view of what constitutes “voluntary giving up” by laying down that “the act of giving a letter requesting the Governor to call upon the leader of the other party to form a Government, itself would amount to an act of voluntarily giving up the membership of the party on whose ticket the said members had got elected”. Hence the fact of defection can be implied as well express.

Even after a scrutiny of constitutional literature ranging from bare provision to the judicial interpretation, the dispute rests with the judiciary standing at the forefront as the torchbearer. The author awaits the reasoning of the Court coming up on October 20 which would further provide me the chance to analyze the approach of judiciary in such matters.

The Kihoto Hollohan case conclusively established judicial review in case of disqualification of members form the house as it struck down para 7 of the tenth schedule.

Validity of Presumption of Marriage: An Unresolved Quandary

The fate of female partner in a live-in relationship, though presently at the crossroads and in intersection with the institution of marriage, has been shown a ‘yellow light’ by a divisional bench of Supreme Court in its latest decision in Chanmuniya v. Virendra Kumar Singh Kushwaha & Ors, wherein the Court has requested the Chief Justice of India to refer three contentious questions of law to be decided by a larger bench. The most important question among them is that whether the living together of a man and woman as husband and wife for a considerable period of time would raise the presumption of a valid marriage between them and whether such a presumption would entitle the woman to maintenance under Section 125 Cr.P.C?

In the present case, the Appellant, after the death of her husband, had married to his younger brother (the first respondent) as per the alleged customs and usages (viz. Katha and Sindur) prevalent in the Kushwaha community in 1996. They both lived together and fulfilled all the marital obligations toward each other till the time when the husband starting torturing her which was followed by refusal to maintain her and fulfill the marital obligations. The High Court held that there was no valid marriage as the essentials of a valid Hindu marriage, as required under Section 7 of the Hindu Marriage Act, 1955 had not been performed between them and thus it held that the first respondent was not the husband of the appellant. Aggrieved by this, the appellant brought the matter to the Supreme Court wherein the Court was once again cropped with the question whether a man and woman living together for a long time, even without a valid marriage, would raise as in the present case, a presumption of a valid marriage entitling such a woman to maintenance.

To clear the grey clouds around the interpretation of word ‘wife’ as given in section 125 of Cr.P.C, the Court referred to the catena of cases decided by House of Lords, Privy Council and Supreme Court and categorically remarked that “the man should not be allowed to benefit from the legal loopholes by enjoying the advantages of a de facto marriage without undertaking the duties and obligations. Any other interpretation would lead the woman to vagrancy and destitution, which the provision of maintenance in Section 125 is meant to prevent.” The Court being conscious to the probable sufferings of the female partner in such relationships remarked that a broad view needs to be taken to interpret the word wife in this section, nevertheless, the Court also took note of the fact that sitting in a two-Judge Bench, they cannottake a view contrary to the views expressed in the Yamunabai Anantrao Case and Savitaben Bhatiya Case wherein the Court held that the wife means legally wedded wife.

The author, although satisfied by the concerns of the Hon’ble Court, is conscious as to the approach taken up by the Court to interpret the law on this point. It is humbly submitted that the Court should be careful when it uses phrases like presumption of a valid marriage. I had earliest opportunity to discuss the ramifications of such terminology in a recent decision of the Apex Court with my classmates during our Family Law class discussions. A valid marriage as per HMA not only requires fulfillment of essentials as provided under section 5 but also the essential ceremonies as provided under section 7. When the Court makes presumption of a valid marriage, the author believes that the Court looks at section 5 in isolation and completely ignores the other collary essentials. The question which still remains unsolved and unresolved is that – is such presumption is in strict compliance with the fulfillment of requirements of a valid marriage. Moreover, this legal fiction of validity of a marriage would defeat the purpose of the HMA wherein the Parliament has clearly provided a set of requirements which are necessarily to be fulfilled by the parties to the marriage. The Court has reached the right conclusion but still the reasoning employed by the Court contradicts the status of women as wife in HMA. Though the female partner is protected and covered under the ambit of Domestic Violence Act, 2005, yet, notwithstanding the current case law development, there is still a long journey ahead. It is a difficult task for the Supreme Court to arrive at a conclusive decision on this yet the hopes of many couples living in such relationships are attached with this referral.

Jeet Soni

The Caught-up Giant – Vodafone [Part 1]

The Recent Bombay High Court landmark decision in the Vodafone case has compelled me to write on it. I would deal with this matter in two divided posts – the first one would provide an overview for the reader unacquainted with the controversy in hand and the decision of the Court. In the succeeding post I would cull out the far reaching ramifications of this judgment – both at national and international level. A perusal of following paragraphs, thus, becomes essential in order to berate or appraise the decision.

One might be amazed to note the finding of the court in page 3 of the judgment. The judges have attempted to give graphical overview of complex shareholding patterns in the giant’s involved. With all due respect to the Court, I would like to simplify the situation to the readers in words. The saga began in May 2007, when Vodafone International Holding B.V. (A Dutch subsidiary of Vodafone Group U.K.) acquired 52% stakes in CGP Investments (Holding) Ltd (A Cayman Island based company) from Hutchison Group (A Hong Kong based corporation) in a whopping deal worth US $ 11.01 billion. Central to this controversy is the fact that CGP Investments Ltd was holding 67% shares of Hutch Essar Ltd. (an India based company). As a direct consequence of this deal, Vodafone acquired the interest in Hutch Essar Ltd India with the transfer of the shares from CGP Investments to Vodafone. The Income Tax Authorities (ITA) joined the party pretty soon. The ITA realized that taxable gains which arose due to this transfer significantly involve Indian assets. The ITA, therefore, issued a show cause notice to Vodafone since it failed to discharge this tax obligation. The primo contention of ITA submitted before the court was that tax is owed on the deal because the assets sold by the giants were based in India and that Vodafone, being the buyer, was responsible for adhering to this tax obligation. The contrary submission of Vodafone was that there was no tax obligation owed on the said transaction because it took place between foreign companies and the entity involved in the deal was registered in the Cayman Islands. In the words of Harish Salve appearing on behalf of Vodafone, it was merely a sale of one share of a foreign company from one non-Indian company to another. The main question which arose before the Court was that whether the said transaction between the foreign companies resulted in an income which would be taxable in India, or in other words whether ITA has jurisdiction to tax the remittance occurred in the said transaction?

An HC division bench of Justices D.Y. Chandrachud and J.P. Devadhar in a 196-page judgment, after comprehensively analyzing Indian and International taxation laws, expounded that Vodafone was under an obligation to pay taxes on its $11 billion acquisition of CGP Investments in 2007 and the Indian tax authorities had jurisdiction to tax the gains arising from such transactions as it involved the transfer of rights and entitlements of local Indian subsidiaries. The Court rejected the contention the raised by Mr. Harish Salve that it was merely a sale of one share of a foreign company from one non-Indian company to another. (¶ 136) The Court noted that the transaction in question had a significant nexus with India. The essence of the transaction was a change in the controlling interest in HEL which constituted a source of income in India context. (¶ 144) However, a relief for Vodafone comes from the order of HC where it has asked Tax Authorities not to pass final order before 8 weeks. This provides Vodafone with a chance to appeal to the Supreme Court.

(To be continued….)

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Jeet Soni

The Roller Coaster Journey of Business Method Patent: The Case of Bilski [Part 1]

I propose to cover this post in three parts. First, I would give a prologue to the issues involved in Bilski case. Secondly I would delve into the remarkable opinion of Judge STEVENS and the thirdly I shall briefly review the possible outcomes Bilski judgment.

Part I- Overview oF The Case

In a landmark judgement of the US Supreme Court in Bilski V Kappoa (28th June, 2010) the court held that the “machine or transformation” test, laid down by the US Court of Appeals for the Federal District (CAFD) in the In Re Bilski case (2008), is not the sole test for deciding whether a process is an eligible patent set forth in 36 U.S.C. section 101. The petitioners sought to patent an invention that explains how commodity buyers and sellers in the energy market can be protected, or hedged, against the risk of price changes. The patent examiner rejected the petitioners’ application on the ground that it was not directed to the technological arts and that it merely manipulates an abstract idea. The BPAI affirmed the examiner’s decision on the grounds that the patent in question involved only mental step which does not transform physical subject matter and that it was directed to an abstract idea. The petitioners then preferred an appeal to the CAFD and after briefing, the court decided to hear the case en banc. The CAFD reviewed its earlier decisions in the State Street (1998) and the AT&T Corp (1998) case and held that the “useful, concrete, and tangible result” test set forth in the above two decisions were inadequate and that the sole test for determining subject matter of patentability was the “machine or transformation” test. According to the above mentioned test a claimed process is patentable if the following conditions are fulfilled. (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. Applying the test the court held that Bilski’s claim was not limited to a specific machine or apparatus nor did the process in question transformed any article into a different state of thing. Hence the process as claimed was held to be outside the boundaries of statutory subject matter and therefore was declared non-patentable.

Bilski then petitioned the US Supreme Court for a review which was granted. The only question that was sought to be decided by the court was whether the so-called machine-or- transformation test is the exclusive test for what constitutes a patentable “process” under 35 U. S. C. §101. The Court ruled unanimously that the machine or transformation test was reliable in most cases but was not the exclusive test. The Court categorically declined to read limitations into the patent act which is inconsistent with the Act’s text. The court reaffirmed its earlier decision in the Benson (1972), Flook (1978) and Diehrs (1981) case and held that the court had always kept the “Constitutional Standard” in mind when deciding what is patentable and non-patentable, a reference to the “laws of nature, natural phenomena, and abstract ideas” which are considered exceptions to patents.

Kanad Bagchi

(To be continued)

Is Deterrence A Good Solution?

The etymological meaning of the word deterrence is “A communication that makes you afraid to try something”. This practice has been the core of Criminal Justice mechanism for many a years due to the fact that it generates fear in the heart of the people and forbids them from committing an offence. The author in this short note would like to raise his concerns over death penalty as a form of deterrence.

The recent Iranian Court dictum in which Sakineh Mohammadi Ashtiani – a 43 year old mother of two children, was convicted of adultery and was sentenced to death by stoning has grabbed the attention of international community. The lawyer of Iranian lady reports that with the end of a moratorium on death sentences for the Muslim holy month of Ramadan, the woman would be executed any moment. In various jurisdictions around the globe including India, a death sentence is pronounced in rarest of the rare case. When I review the above sentence of Iranian woman in the light of above Penal codes, then this sentence seems to be most improper and inhuman one. We take pride in the fact that we live in an era of modern civilization marked by 21^st century, however it is humiliating to note the ongoing existence of penal provisions which are despotic in nature. One such example is Article 102 of Chapter 2 of Islamic Penal Code of Iran. This provision reminds us of the horrible history of England wherein every other offence ended with capital punishment.

Article 102: The stoning of an adulterer or adulteress shall be carried out while each is placed in a hole and covered with soil, he up to his waist and she up to a line above her breasts. 

The verbatim of the Islamic Penal Code of Iran quoted above reveals the identical treatment which was given to witches nearly a century back in England. The theories in criminology speak that the pain during the period of punishment should be same as the pleasure been derived during the commencement of the act, but the theory seems to being inapplicable to such a cold-blooded and insensitive mode of punishment. Another recent realization which is more horrific and shakes the conscience of humanity is honour killings. A contemporary research done by journalist Robert Fisk concludes that the UN figure of 5,000 honour killings per year worldwide is now crossed its precursor numerical to reach the figure of 20,000. The offenders of this heinous offence are not generally from any religion, though the majority view is pointed at Islamic countries. Now the praxis of Honour Killing can also be noted in the Hindu and Christian community. The author is of view that we survive in the 21^st century but the aforesaid instances are symptoms of the worst dream of humanity coming true in near future.

 
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Aishvary Vikram

B.Sc.LL.B. 2^nd Year

Khaps want laws against homosexuality, surrogate motherhood and stern punishment for pornographic offences

The recent news article on the demands of Khaps points out the fact that the khap panchayats are not even sure of the fact what they want, first they want a ban on same gotra marriages now then on the practise of homosexuality and  now surrogate motherhood. The first question is what authority do they posses to press for such legal sanctions and for what reasons. They are behaving like some kind of  ethical and moral conditioners with no authority. On the top of it they are threatening the government with a strike on December 21. What do they think they are some kind of godly revelations who's primary duty is to protect the customs and traditions and shut all doors of liberty of the people and turn our heads to the opposite side so that we can only see the past and not the future. They think that sitting in some corner of India they can enforce what ever they want on the whole of India and without even taking into considerations what others want. Even if they demand for some kind of state amendments, their demands are on those issue are completely against modern day society. They want lok adalat status with judicial powers so that they can  kill, slaughter people whenever and wherever they want. What problem do they have with surrogate motherhood? Are they going to say it is like playing god and questioning their authority, come one god's authority was questioned when man discovered ways to produce fire by striking rocks, that was questioning god's authority, done is some century B.C. 

The punishment for an offence under section 292 of the IPC(Obscenity as an offence)  is on first conviction with imprisonment (simple or rigorous) for a term which may extend to two years, and with fine which may extend to two thousand rupees, and in the event of a second or subsequent convictions, with imprisonment (simple or rigorous) for a term which may extend to five years, and also with fine which may extend to five thousand rupees.

The punishment for an offence under section 67 of the IT Act is on first conviction with imprisonment (simple or rigorous) for a term which may extend to five years, and with fine which may extend to one lakh rupees, and in the event of a second or subsequent convictions, with imprisonment (simple or rigorous) for a term which may extend to ten years, and also with fine which may extend to two lakh rupees. Even with these kind of punishment they want 'stern' measures to be taken. Now its very difficult to gauge what stern punishment is. If they are hoping for some kind of life imprisonment or death penalty, this hope is completely out of the question. Can't these khaps think of anything which is more civilised and does not amount to killing. Really what are they panchayats or terrorist organizations ????

Sourav Dan

BSc. LLB, 3rd Year

Vedanta Vicissitude

Nehru on the eve of laying the foundation-stone for India’s first major river valley project, the Hirakud Dam in 1948, told ten thousand tribal residents of Orissa who were facing the grim prospect of displacement "If you are to suffer, you should suffer in the interest of the country”. Justification provided for the state action was agrarian reform policies. The implications of the proposed mining activity by Vedanta in the State, brought to light by the recent four members Dr. N.C. Saxena committee report, has resurrected the long forgotten wounds of tribal residents of Orissa. Historically, the relationship between tribal communities in India and forests was characterized by co-existence. These communities are also considered integral to the mutual survival and sustainability. This symbiotic relationship has corroborated into customary rights over forest produce. But these rights were not recognized and recorded by the government while consolidating state forests during the colonial period as well as in independent India. This injustice was further perpetuated by non-recognition of such rights of the tribals in the Wildlife (Protection) Act 1972 (the ‘WPA’) and the Forest Conservation Act 1980 (the ‘FCA’). Both the pieces of legislation found the environmental protection regimes and rights of tribal communities as incompatible. However, the recent 2006 legislation i.e. Recognition of Forest Right Act, 2006 (FRA) is some light at the end of the tunnel. This piece of legislation has identified and recognized the forest rights of tribal’s. The recommendations in Dr. Saxena Committee report seeking rejection of clearance to Vedanta Company has been backboned by the FRA. The finding of the committee reveals that the entire proposed mining lease area (PML) of Niyamgiri hills area allocated to Vedanta for mining falls within the category of Community Forest Resource (CFR), as defined in the Forest Rights Act (FRA), allocated to the tribal habitants in the villages inside or surrounding the four forest blocks. These villages have been vested with recognizable community and habitat rights by GoI under section 4(1) of the FRA. The mining activity of Vedanta if allowed would be clearly contrary to the aforesaid mentioned provision of FRA. As was suggested by the committee, the environmental ministry has rightly denied giving of clearance certificate to Vedanta for its proposed mining project on the same grounds. Human costs of this project is also very high, Dr. N.C. Saxena committee report also states that displacement would be one of the inevitable consequences of this project. Amidst all these legal connotations, the politicization of this issue, with the state government supporting Vedanta and a recent visit by a leader of the ruling party at power in the center, Rahul Gandhi, to the proposed site at Niyamgiri Hills to oppose the project, I can only hope that the rights of the tribal’s are not put to sacrilege.

References For Further Reading
1. Lovleen Bhullar, ‘The Indian Forest Rights Act 2006: A Critical Appraisal’, 4/1 Law, Environment and Development Journal (2008), p. 20, available at http://www.lead-journal.org/content/08020.pdf

2. Dr. N.C. Saxena, D.r. S. Parasuraman, Dr. Promode Kant, Dr. Amita Baviskar, Report of The Four Member Committee for Investigation Into The Proposal Submitted by The Orissa Mining Company for Bauxite mining in Niyamgiri, August 16 2010, at 8-9.

3. section 2(a), FRA, 2006.

4. Soumyajyoti Biswal, Cost of Development: Displacement, Orissa Economic Association Journal (2009).

Plight of UGC Regulations

The recent Rajasthan High Court dictum on the implications of UGC Regulations on the State Universities has once again reiterated the opinion of Supreme Court in T.P. George Case. Indeed this was not the first judgment when the High Courts in India have ingenuously overlooked the binding mandate of UGC Regulations. This dictum of Rajasthan High Court contributes to an array of decisions whereby the judiciary has made a mockery of the legal solemnity to the Regulations passed by a body which has been constitutionally entrusted to make provision for the co-ordination and determination of standards in Universities. The thought that these regulations which are specifically made within the ambit of the power conferred on UGC are not binding on the Universities will surely undermine confidence in the UGC as a body established with a constitutional mandate. The main question before the Courts has always been that whether the UGC Regulations are binding on the State Universities. Before I analyze the correctness of these decisions it is quite pertinent to briefly review the facts and circumstances which have led to the current controversy.

The story starts when the Chaddha Committee, which was constituted for revision of the pay scales of teachers in higher education at par with the 6^th Pay Commission, came up with a conclusive suggestion for an increment in the superannuation age of teachers from 62 to 65 years with an objective to meet the acute shortage of experienced teachers in state universities. On the basis of this report MHRD formulated a scheme which included pay scales, qualifications, recruitment procedures and covering various other important aspects, one such aspect being the superannuation age. Subsequently, the MHRD and the UGC flashed out various circulars to the education secretaries of States directing them to implement the UGC’s composite scheme in toto failing to which the State Government will have to cease its demand of reimbursement to the extent of 80% of the additional expenditure incurred on the payment of the revised scales. On June 30, 2010 UGC in pursuance of letter from MHRD framed UGC Regulations 2010. These regulation were framed under the powers conferred by clauses (e) and (g) of section 26 of UGC Act, 1956.

Various State Universities across the country in order to avoid the implementation of this regulations claim that this UGC fiat has no binding effect on them as these regulations are mere recommendations and cannot override the State Universities Act enacted by the state legislature under entry 25 of the concurrent list. The same view was upheld by Supreme Court in T.P. George case which has been reiterated in bundle of High Court judgments. However, the author is of the view that in the current educational regime, there has been significant transformation in the work of UGC then and today. Now these regulations are no more mere recommendations. The High Courts in India have failed to appreciate the context in which the Supreme Court ruled in T.P. George and have tried to riposte the judgment of the Supreme Court. The principle of Stare decisis also worked like handcuffs for the High Courts. This has left the following questions unanswered which are of great significance in current scenario. First, whether age of superannuation is a matter which comes within the purview of entry 66 of List 1 of Seventh Schedule to the Constitution of India? Second, whether the interpretation of the apex Court in T.P. George Case is significantly overruled by subsequent case laws? Third, whether the regulations made by UGC are in the form of delegated legislation and can it override State Legislation? Finally, whether the Court took into consideration the wordings of the regulations which in this case appear to be more than mere recommendations?

The judiciary should take note of the nature of the functions performed by the UGC and at this juncture it is essential that the regulation made by UGC should be given a status more than that of a mere recommendation. Further, these regulations should have universal application throughout the country so that UGC can discharge its constitutional mandate of making provision for the co-ordination and determination of standards in Universities effectively and efficiently. The author expresses his apprehension that by ousting the control of UGC over State Universities, the constitutional purpose for which UGC has been established would fail.

Critical comments would be much appreciated!