An eventful year – 2012

2012, unarguably, is one of the worst years for Indian politics with unvarying scams and uninspiring deeds of politicians. Hardly any steps were adopted (except for few attempts in later half) to revive the economy either. If there is a single institution which had an eventful year, it has to be the Apex Court of India. Far from perfection though.

Here is a simple review of landmark judgments/ legal developments happened in this eventful 2012 (with links to judgments and reading materials). Hope you will find it useful.

JANUARY 20, 2012 – VODAFONE JUDGMENT

On January 20, 2012, the Supreme Court ruled in favor of Vodafone saying capital gains tax is not applicable to the telecom major. The Court overruled the judgment of Bombay High Court and held that Income Tax department should return Rs.2,500 Crores to Vodafone with 4% interest. As a huge boost for cross border mergers in India, the Court held that there is no question of TDS being deducted under Section 195 of the Income Tax Act, 1961 and that it is a bonafide FDI transaction. It is considered to be one of the major blows for the tax department in recent years.

Full text of the Bombay High Court Judgment (September 8, 2010) – Click here.

Full text of the Supreme Court Judgment – Click here.

Reaction

The matter however did not rest with the judgment of Supreme Court.

The government, in March 2012 proposed, in its budget, the most controversial retrospective amendment to the Income Tax Act that would help the government to overturn the Supreme Court order.

The prospective retrospective amendment can be seen here. [Taxmann]

Recently, the government has approached the Apex Court seeking a review of the judgment. The department wants the matter heard afresh by a larger seven-judge bench. [Financial Express]

Besides these desperate attempts by the government, there are few people who have also criticized the judgment for having exceeded its jurisdiction. [Indian Express]

FEBRUARY 2, 2012 – CANCELLATION OF 122 TELECOM LICENSES 

On February 2, 2012, the Apex Court cancelled all 122 unified access service licences which were issued in January 2008 by former telecom minister A Raja. The decision came as a heavy setback for the government. The eight companies who were holding the licences together invested Rs 35,000-40,000 crore, of which two-thirds was put in by two telcos, Uninor and Sistema.

The Court also directed the Telecom Regulatory Authority of India (TRAI) to make fresh recommendations for the telecom spectrum auction route in future, within four months of the Order.

List of cancelled 2G licenses [Business Standard]

Full text of the Judgment – Click here.

Reaction

Few observations and directions by the Court on method of disposal of natural resources lead to a Special Reference by President under Article 143 of the Constitution of India. The Hon’ble Court rightly ensured, through this special reference, that this judgment does not fall within the never-ending battle between Judiciary and Legislature/ Executive. It clarified that the scope of 2G judgment is restricted only to spectrum and also that Court cannot and will not prescribe any policy as the only constitutional permissible policy. It was a concurring opinion which offered separate reasons for same conclusions on majority.

Original presidential reference – Click here.

September 27, 2012 – Opinion rendered by Supreme Court in presidential reference – Click here.

APRIL 12, 2012 – RIGHT TO EDUCATION JUDGMENT

On April 12, 2012, the Supreme Court rejected a batch of petitions and upheld the constitutional validity of Right to Education Act (RTE), 2010 through a majority of then Chief Justice SH Kapadia and Justice Swatenter Kumar. However, Justice Radha Krishnan dissented from the view that a fourth of seats in all schools, including private ones, should be reserved for admission to economically weaker students.

RTE mandates 25 percent reservation and the bench brought all educational institutions within the ambit of this Act except for unaided minority institutions. The Act, which is operational in at least 19 states, envisages free and compulsory education for all poor children aged between 6 and 14 years.

Full text of the Judgment – Click here.

AUGUST 31, 2012 – SAHARA

The second major judgment of the year, in terms of money involved, came from the bench of Justices KS Radhakrishnan and Justice JS Khehar on August 31, 2012, where two Sahara group companies were ordered to refund Rs 24,000 Crores they had collected through optional fully convertible debentures, to SEBI with 15 per cent interest by November 30, 2012, since they had violated various regulatory norms. The judgment is undoubtedly a boost for SEBI in reinstalling its powers as a regulator in the market.

Full text of the Judgment – Click here.

Reaction

The Court invited strong criticism recently when a bench presided over by Chief Justice of India Altamas Kabir modified the judgment of August 31, 2012 by allowing SAHARA to pay the amounts in installments. It was a shocking incident for many lawyers. Legal luminaries have criticized this order particularly because final order passed by one bench could not possibly be modified by another bench and that it would set a wrong precedent. [Legally India]

SEPTEMBER 6, 2012 – BALCO JUDGMENT ON ARBITRATION

On September 6, 2012, the Constitution bench of then Chief Justice of India SH Kapadia and Justices D. K. Jain, Surinder Singh Nijjar, Jagdish Singh Khehar and Ranjana Prakash Desai overruled the doctrine laid down in its own 2002 landmark judgment Bhatia International v Bulk Trading SA & Anr case, which held that Indian courts had exclusive jurisdiction to test the validity of an arbitral award made in India even when the proper law of the contract is the law of another country.

The Apex Court held that part 1 of the Arbitration Act does not apply to international arbitration and that the seat of arbitration will determine jurisdiction of the court. This judgment is hailed as one of the landmark judgments which renewed arbitration in India.

Full text of the Judgment – Click here.

SEPTEMBER 11, 2012 – MEDIA GUIDELINES

The special constitutional bench of Supreme Court, on September 11, 2012 laid down a new doctrine that, if requested, would allow courts to temporarily ban media from reporting a case if it would adversely affect the trial. However, the Court declined to create wider guidelines on how the media should report court cases

The Chief Justice of India S.H. Kapadia, said that if publishing news related to a trial would “create a real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial”, the court could grant a postponement order, temporarily gagging electronic or print media from reporting on the case.

However, this excise undertook by the Court was more of an academic nature and it helped none.

Full text of the Judgment – Click here.

SEPTEMBER 13, 2012 – RTI JUDGMENT

On September 13, 2012, a division bench of the Supreme Court, comprising Justice AK Patnaik and Justice Swatander Kumar disposed of a writ petition (within two months) ruling that information commissions under the Right to Information Act, 2005 (RTI Act) must function with two-member benches, one of the two members being a high court chief justice or a supreme court judge for the post of chief information commissioner. The judgment certainly brought the functioning of CIC to an abrupt emergency halt.

The judgment also prescribed procedures for appointment to these posts.

Full text of the Judgment – Click here.

Reaction

This judgment has been criticized by all quarters and considered to be one of the major blunders committed by the Apex Court. It is opined by many RTI activists and legal luminaries that this judgment could just kill the RTI Act and that it would create unnecessary hurdles and delay in its enforcement.

Few articles:

A recent Supreme Court ruling could kill RTI [Forbes]

Judges’ quota ruffles RTI panel [Hindustan Times]

SC ruling stumps RTI fraternities [The Hindu]

Information Commissions need judicial members: apex court [Live Mint]

NOVEMBER 9, 2012 – REVISITING COLLEGIUM SYSTEM

After almost 19 years of nine-judge bench of Supreme Court passing a judgment as to collegium in the appointment of judges in Supreme Court and High Courts, the possibility of Supreme Court revisiting the same by eleven-judge bench has increased. The bench headed by Chief Justice of India Justice Altamas Kabir on November 9, 2012 issued notices to the Union of India and Attorney General on a petition filed by a trust seeking review of the 1993 judgment.

The government has already been working on, for a long time, a Constitution Amendment Bill to provide for a Judicial Appointments Commission.

OTHER MAJOR DEVELOPMENTS

(i) Many issues as to validity of few provisions of IT Act, 2002 (particularly Section 66A) as also its enforcement were raised this year by various quarters and rightfully so. Incidents like blocking twitter accounts/ websites and unnecessary arrests/ charges had triggered these issues and recently a PIL has been filed by one law student in Supreme Court challenging constitutional validity of Section 66A of the Act. The Court has taken cognizance and issued notice to the government.

(ii) Though it is more of a policy decision, allowing FDI in multi-brand retail can be considered one of the major legal developments happened in the year 2012. On September 14, 2012, the government of India announced the opening of FDI in multi-brand retail, subject to approvals by individual states. On September 20, 2012, the Government of India formally notified the FDI reforms for single and multi-brand retail, thereby making it effective under Indian law. On December 7, 2012, the Government of India allowed 51% FDI in multi-brand retail in India. The government managed to get the approval of multi-brand retail in the parliament despite heavy uproar from the opposition.

(iii) After a long wait, Companies Bill, 2011 has been passed by Lok Sabha on December 18, 2012.

Full text of the Companies Bill, 2011 – Click here.

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