One can imagine these words being uttered by a salesperson, or even printed in bold on an advertisement for the Delhi Police. It is not what one would, as a matter of fact, expect to hear in a court room; definitely not from the presiding judge.
Yet, remarkably, in the Registrar’s Court No. 2 a few days ago, when a petitioner-in-person lost his cool — agitated and frustrated that his case would again not be listed before the Supreme Court for hearing because service of documents was not complete on all respondents — these simple words were what the presiding judge had for him.
These words are remarkable, not because the presiding judge sensibly preferred them over a stern rebuke to the petitioner-in-person for violating the decorum of the Court, nor simply because they demonstrate an acknowledgement of the emotional pitfalls of litigation, especially for those courageous enough to fight their own cases without a lawyer; these words are remarkable because they force all of us to examine the question “What are we here for?”
What is the purpose – of the Supreme Court, its judges, its staff, its advocates, its litigants, its reporters, its commentators, and other stakeholders? In assessing our respective roles in the administration of justice, is there a lens we can use that is not teleological, and if not, what does this lens show us?
Au contraire, are we fooling ourselves by evoking a singular, grand purpose of participation in the administration of justice for all players, if only because such a purpose is a Sisyphean one? Perhaps it is more appropriate to accept that the administration of justice is nobody’s responsibility. Things are what they are for no cause attributable to anybody in particular. Therefore, individual actors need not be mindful of their actions beyond their explicit obligations.
By referring to current judgments and institutional developments at the Supreme Court, as well as opinions, comment and anecdotes, this fortnightly blog will offer a space for reflection.
If you are in any way associated with the Supreme Court, chances are that your association has lasted longer than mine (barely a year now). Your thoughts, suggestions, and — I hope there will be no need for these — corrections, are most welcome.
Next fortnight
Have you tried the Supreme Court’s Android app?
5, 2, 1, 3, 4, 14, 12, 10, 8, 6, 7, 9, 11, 13, 15 – if these numbers mean nothing to you, you are yet to take your first steps in decoding the Supreme Court’s institutional grammar.
(Aditya Verma practices as an Advocate at the Supreme Court of India. He is an alumnus of NLSIU, Bangalore, and is admitted as a solicitor in England and Wales.)
The new regulations will make Indian business houses like Tata think twice before making an investment like it did while acquiring Jaguar in 2008. Image on the right is from syam’s photostream on Flickr and has been published under a CC BY 2.0 licence.
As part of its efforts to reign in flagging economic growth, the Reserve Bank of India (“RBI”) announced, in a press release issued on August 14, 2013, a few measures to curb overseas investment by Indian companies and individuals. Briefly, these include:
The reduction of the limit for overseas direct investment (“ODI”) under the Automatic Route for all new ODI transactions from 400% to 100% of the net worth of the Indian party;
The reduction in the limit for remittances made by individuals resident in India under the Liberalised Remittance Scheme from USD 200,000 to USD 75,000 per financial year; and
The prohibition of the use of the Liberalised Remittance Scheme for the acquisition of immovable property outside India, directly or indirectly.
Let us consider the implications of these changes. We can conclude that, effectively, the RBI will treat any ODI in new joint ventures or wholly owned subsidiaries in excess of 100% of the net worth of the Indian investor, as an ODI investment that needs RBI approval.
Existing JVs and WOS
Now, the notification states that these changes will apply prospectively and not to existing joint ventures or wholly owned subsidiaries (“JVs/WOS”) set up under the extant regulations. What does this mean? Can we conclude that Indian entities can continue to invest in existing JVs/WOS set up under the extant regulations up to the 400% net worth limit? This does seem to be conclusion if you consider the following statement from the notification:
“These provisions shall come into effect with immediate effect and would apply to all fresh Overseas Direct Investment proposals on a prospective basis but would not apply to the existing JV/WOS set up under the extant regulations.”
Or is the intent to restrict all new investments irrespective of whether the investment is into a new JV/WOS or an existing one?
Nature of investment
Another point of concern, especially when considering the press note from the perspective of financing transactions, is whether the limit applies to guarantees extended to JVs/WOS by Indian entities.
The source of this uncertainty is the following choice of words in the notification:
“… the total overseas direct investment (ODI) of an Indian Party in all its Joint Ventures (JVs) and / or Wholly Owned Subsidiaries (WOSs) abroad engaged in any bonafide business activity should not exceed 400 per cent of the net worth of the Indian Party as on the date of the last audited balance sheet under the Automatic Route.”
“The total financial commitment of the Indian party, in all the Joint Ventures / Wholly Owned Subsidiaries put together, shall not exceed 400% of the net worth of the Indian party as on the date of the last audited balance sheet.”
Is this a deliberate distinction created by the RBI? Can we assume that the new 100% limit applies only to direct investment into the JVs/WOS and not to loans or guarantees extended by the Indian entity?
The answers to these questions can significantly impact the way in which acquisition and financing transactions are structured, and we can be sure that the RBI will need to clarify their position on ODI in the near future.
(Deeksha Singh is part of the faculty at myLaw.net.)
After a long wait, the Rajya Sabha finally approved the Companies Bill, 2012 on August 8, 2013. The Lok Sabha had, after detailed deliberations, approved the Companies Bill in December 2012. It is now on the cusp of becoming an act, and only requires presidential assent and notification in the Gazette of India.
Once effective, it will replace a fifty-year-old legislation, the Companies Act, 1956 (“Companies Act”), the primary legislation for the incorporation, operation, and governance of corporate bodies in India. The bill promises to create a more effective, efficient, and simplified corporate law framework in India.
A good indication of the simplified structure is the overall framework of the Companies Bill. While the Companies Act consisted of 658 sections, the Companies Bill appears to be much cleaner, and takes only 470 clauses (divided into twenty-three chapters) and seven schedules to deliver the message. Through a series of posts here, I will explore and analyse the wide breadth of amendments proposed. To begin with, I will provide an overview of the major proposals.
One-person company
In line with global norms, the Companies Bill introduces the concept of “one person company”, a special type of private company. Defined in Clause 2(62) of the Companies Bill, the term simply means a company in which only one person is a member. These companies have been provided the flexibility of having only one director and enjoy exemptions in relation to filings and the holding of meetings. For instance, if there is only one director, Clause 122(4) of the Companies Bill proposes that a board resolution that needs to be passed can simply be entered in the minute books of the company, without holding a physical board meeting.
Private companies
Life may get tougher for private companies under the new regime. They stand to lose many of the exemptions they were entitled to under the Companies Act. A good example would be Clause 62 of the Companies Bill, which makes a special resolution a mandatory prerequisite for a preferential allotment in a private company. Under Section 81(1A) of the Companies Act, the requirement for a special resolution was applicable only to public companies.
Corporate Social Responsibility
Detailed provisions on corporate social responsibility (“CSR”) are also part of the Companies Bill. CSR activities have been made mandatory for the first time in India. Companies will have to spend on such activities in one financial year, at least two per cent of the average net profits of the three preceding financial years. This requirement is restricted, according to Clause 135 of the Companies Bill, to every company with: (a) a net worth of Rupees five hundred crore or more, or (b) a turnover of Rupees one thousand crore or more; or (c)a net profit of Rupees five crore or more, during any financial year. Such companies must constitute a corporate social responsibility board committee consisting of three or more directors, out of which at least one director will be an independent director.
M&A
Changes have been proposed in the procedure for mergers and amalgamations to make the process simpler and more efficient. The provision for fast-track mergers, where the approval of the National Company Law Tribunal is not required, if it is a merger between two small companies, between a holding and subsidiary company, or between any other companies as may be prescribed, appears to be a welcome change. Cross-border mergers have also been specifically permitted under the Companies Bill.
Corporate governance
The Satyam scandal has influenced the direction of Indian company law. Source: WIkimedia Commons.
In the wake of the Satyam scandal, the Companies Bill has sought to prescribe stringent standards of corporate governance. The term “independent director” has been defined, and the standards and qualifications necessary for appointment have been prescribed. Further, independent directors should make up at least two-thirds of the board of directors of every listed company. Interestingly, independent directors have been insulated from any liability in case of a fraudulent act (unless of course it has been done with their knowledge). It is expected that such a provision will go a long way in attracting the right kind of talent to these posts as they can now be assured that they will not be subject to any liability unless they have willfully taken part in it.
Class action suits
Clause 245 of the Companies Bill introduces the concept of class action suits. Simply put, a class action suit is one where a number of persons with the same claims and legal grounds can sue a corporate body. The Enron situation, where class actions suits were filed in the U.S. against Enron claiming millions in damages, is a well known example.
Under the Companies Bill, a class action suit can be filed against a company, its auditors, directors, or other concerned experts by a prescribed number of members or depositors if they are of the view that the affairs of the company are being carried out in a manner that is prejudicial to their interest. It will indeed be interesting to see how this provision plays out in the corporate sector.
These amendments are just a few of the many changes proposed in the new Companies Bill. This proposed law looks to alter the way businesses are run today to make them more efficient and profitable, but also socially conscious and accountable to their stakeholders.
Even though it is difficult to predict how all the proposed changes will interact with each other, the corporate world will finally see some changes to Indian company law to bring it in line with the changing economic environment.
(Deepa Mookerjee is a member of the faculty at myLaw.net.)
Last week’s post focused on how lawyers can enhance relationships with their clients using plain English communication. I raised the point that our clients often have a certain expectation about the kind of language lawyers should use, and how there needs to be explanation and education about the benefits of plain language. Those same expectations undoubtedly exist across the profession—amongst our colleagues and in the judiciary—so, to encourage the use of plain English, we also need to tackle those perceptions.
As we all know, one of the essential prerequisites of good communication is to know your audience. This is true across all forms of writing and speaking and is especially important when you are trying to persuade your reader or listener. As lawyers, when we are communicating with colleagues and judges, we are very often trying to persuade them to come around to our point of view.
So, what does this have to do with plain English? Well, the current belief amongst many lawyers is that the use of legalese is the only way to draft legal documents and to address the bench in court. But if we really think about the questions “who is my audience?” and, moreover, “what will appeal to them?”, we can see that the use of plain English is actually very helpful.
First of all, keep in mind that when I am advocating the use of plain English, it is not a suggestion that language should be simplistic or colourless. One of the first aspects of knowing your audience is knowing their level of education and understanding, how they might usually speak and write, and therefore how sophisticated your language can be. In the case of communicating with judges and fellow advocates you can, therefore, afford to use sophisticated language. But in doing so, you can also still stick to the tenets of clear, direct, and concise communication—plain English is not just about your vocabulary (although the words that you use are an important consideration), it is also about things like sentence construction and structure.
Make a positive impression with judges and colleagues
Once we’ve thought about the kind of language that we can employ with our audience, the second thing we need to think about is how to best engage or persuade them. As with any audience, in considering communication with other members of the profession, put yourself in their shoes. That should be relatively easy if you are already a lawyer yourself. Think about, for example, what characterises the professional life of a judge or an advocate in India? What difficulties do they face and what would, therefore, be most helpful to this audience and most likely to make a positive impression?
Obviously, the answers to those questions have to address the fact that Indian courts are massively over-burdened and judges must bear an almost impossible caseload. Advocates and lawyers, too, work very long hours and have many clients and cases to attend to. In such a scenario, I would suggest that the number one benefit of plain English is efficiency and ease of understanding.
Imagine the relief of a tired and busy lawyer or judge when they reach for the next motion, brief, or letter and find that it’s written clearly and well, and that they only have to read it once to appreciate the argument or message contained in it. In court, when there is certainly no time to waste, those who speak plainly, clearly, and well will impress the bench with the fact that they are able to get to the point and explain their matter succinctly. A lawyer can build a good reputation with such skills, and is considerably better placed to persuade effectively.
Finally, in case you think that I am merely relying on my own suppositions in making this argument, there has been research done in this area. A study was conducted through the School of Law at the University of Texas in the U.S. into whether judges prefer plain English, legalese, or informal writing. The results clearly demonstrated that judges overwhelmingly favoured the use of plain English in legal writing, finding it to be clearer, more understandable, and ultimately, more persuasive— by a margin of two-thirds (See, Sean Flammer, “Persuading Judges: An Empirical Analysis of Writing Style, Persuasion, and the Use of Plain English”, The Journal of the Legal Writing Institute 16 (2010) at 183.). Given that these are all qualities that most lawyers aim for, this study demonstrates what is apparent to the finest lawyers in active practice—that good use of plain English is essential to effective communication and advocacy.
(Tennille Duffy is part of the faculty at myLaw.net.)
“We are here to help you.”
