IEA, 1872 : Doctrine of Res-Gestae

Reading time : 10 minutes

Introduction

Res Gestae is a Latin word meaning “action complete”. Res Gestae is used to refer to an event statement proving that an event occurred because it was spoken when it was observed.

For example, when people notice that there was a fire in a crowded cinema, and someone shouts “FIRE”, res gestae is displayed. This statement can be interpreted as evidence that a fire has occurred.

Res Gestae was once considered to be an exception to Hearsay’s law. This is because it refers to a phrase that is pronounced too close to the case so that it can be used to show that the event has taken place. Statements according to the Res Gestae doctrine are made naturally and naturally, so anyone listening to them has no space for confusion or misunderstanding. The argument will then be used as evidence if a witness testifies and repeats such a statement in court. The court therefore finds such claims to be completely reliable.

The claims of the Res Gestae doctrine can be divided into three categories.

    • A word or phrase that fully or partially describes a bodily action.

    • Intervention voluntarily enough to succeed in preventing someone from telling the lie against them.

    • A statement confirming the individual’s state of mind.

In some jurisdictions, the word res gestae was also used in connection with receiving images of suspects photographed by police. The tool for proving what proof has been raised in court is the most demanding field of criminal law. This is Res Gestae, one of the test’s values. The Res Gestae doctrine is founded on the premise that proof of irrelevant considerations cannot be rejected by the courts, taking into account all relevant aspects of the chain of cases before a final decision is made within the criminal justice system. Even if any form is distinct from the circumstance.

This is because, in criminal law, the concept of restitution is adopted to prove certain basic evidence. Without the aid of missing evidence, it is difficult to prove the whole argument. Another research study known as the doctrine of Res Gestae may support this. Res Gestae is a Latin term meaning that the same transaction is part of it. This applies to the portion of the event that is related directly or indirectly to the transaction of the main event.

The importance of the Res Gestae doctrine is unclear and inconclusive. It’s a confusing term that makes it impossible to say exactly what is considered the doctrine of Res Gestae. This was not explicitly stated as courts are free to consider the relevant evidence based on all facts in the case.

Res Gestae’s History

Res Gestae rules are based on Thompson v. Trevanion, has been deemed to be able to take a statement of compliance with the law for explanation. In 1736, Ambrose v. Clendon, if the statement was true, it was issued recognizably. The use of the Res Gestae doctrine became a brief discussion of the evidence of Home Took’s betrayal case.

However, the development of this doctrine began in 1805 and was freely used in connection with the term after Aveson’s fall against Lord Kinnard. And it can be said that this exception has been established since the middle of the 19th century. The famous Cockburn CJ decision was discussed in principle. Exception to Bedingfield Res Gestae and rumors. Sir Cockburn thought it was unacceptable because it was made by her after this statement was over. He said he wasn’t part of the transaction, he said it was when the transaction was completed and the transaction was split. This decision was virtually invalid, but it correctly explains the previous principles used to define the Res Gestae exception, which often resulted in unfair consequences.

Bedingfield’s decision was actually too strict. However, this decision was made by Ratten v. The doctrine of R, Res Gestae was defined by common law in free and broad terms. In another example of the queen to the queen, Sir Wilber said: “The testimony would have been accepted as part of Gestae Row, as well as the tight connection of space and time between the statement and the statement. The shooting, but how the statement was made when the police called. And the tone of the voice clearly showed that this statement was made by a woman who is under the overwhelming pressure of modern events. “

Gestae Travel under the Indian Evidence Act

Section 6 of the Indian Evidence Act describes the principles of res gestae. Evidence based on rumors will not be admitted in court. However, res gestae is an exception to rumors. This is due to the spontaneity and immediacy of such statements with little time to invent. Therefore, such statements must be followed simultaneously or at least immediately with the steps that constitute the offense.

Res gestae contains facts that are part of the same deal. So it is important to study what a transaction is, when it starts and when it ends. If the fact cannot be linked to the underlying transaction it is not valid as it cannot be the result. If a statement is made pursuant to the terms of the preamble, that statement is part of the same transaction and is permitted in court. The strengths of section 6 are ambiguous. Each criminal case must be judged on its merits. If the evidence relates to the same transaction, it is allowed in section 6, but reliability is the judge’s assessment.

Res Gestae test

1.If the first test has a causal relationship or, conversely, a causal relationship with the fact that the facts in question are intended to be presented as evidence, then we can say that this fact is part of the following: ‘The same deal with the facts in question. However, this test is not important because all events are a combined effect of numerous effects. Assuming that all these causes and effects are considered relevant and evidence of all such facts is permitted, the exact purpose of limiting evidence to relevant facts in court is entirely possible. Valuable trial time is wasted hearing evidence of distant cases and distant outcomes.

2. The second test assumes that facts about proximity to time and location are present in the segment. The facts which are obviously taking place concurrently and in the same place are closely linked and can therefore be considered important to this section. This is not necessary, however, since the section itself takes account of the possibility that the facts that occur at various times and in different locations which relate to the facts at issue, which are part of the same transaction.

3. The third test implies that the fact that you are finding the facts and evidence in question must be a consistency of action and intent. It is argued that it  is not worth replacing one passage with another.

Case Analysis of Res Gestae Doctrine

The Indian Res Gestae judiciary interpreted the production only as a statement immediately after or immediately after the event, but not “at the time” where the production was permitted.

1. Andhra Pradesh Province v Panna Satia Narayana

The accused killed his wife and daughter. Statement from the deceased’s father that the defendant’s father said over the phone that his son had killed the deceased. Transactions of the absence of conclusions about whether the information provided by the defendant to the father of the deceased killed the deceased. This statement cannot be construed as referring to a section.

  2. Jagser v. Hariana Province

The confirmation of the death claim in this case came from the testimony of Mangat Ram, brother of the deceased father Ruldus, who provided evidence confirming the material aspects of the prosecution. They don’t claim that the accused set fire on Yasin Khan, but they said he ran after a while because they both sued Yasin Khan and his wife Pinky to the house to settle the dispute. At home. Yasin Khan on fire. By applying the principles of res gestae, the two defendants apparently appear to be involved in the crime. The medical certificate duly confirms the ocular medical certificate.

Exception from Res Gestae

An exception to the theory that professional proof is not evidence is Res Gestae. The acceptance of Res Gestae as an exception to the professional rule can be defined as a professional statement relating to relevant facts or comments made during the stress and impact of the incident by the witness. Or with authorization. The rationale of this argument is that in such a striking statement, since the case is so surprising and can only say the facts, the witness is unable to focus on the case. From Suhar v. W.P. Will this issue bear witness to what the victim said to him? As an exception to the general rule, Article 6 was determined that rumors were not accepted as facts.  However  It should be remembered that “the statement is about the same time as the fact of the matter and there should be no production disruption to be part of the same transaction.” In this situation, proof is allowed. As witnesses arrived at the scene, they discovered the body of the deceased and wounded the unconscious survivor.

Criticism

Even when Res Gestae’s concept was in its infancy, there were always signs that it was not well received. It gained popularity due to its comfortable ambiguity. Wigmore sharply criticized the use of the phrase Res Gestae. He wrote that it was “not only completely useless, but also positive damage.” “All test rules applied exist as part of other established principles, and this term is useless because that principle can be explained. This term is detrimental because it confuses one rule with another because of its ambiguity, creating ambiguity for both constraints. Thus, Wigmore concluded that “Res Gestae” would not be mentioned.

Conclusion

In accordance with Res Gestae, proof is usually addressed where it can not be given under part of the Humanitarian Evidence Act. When the case was dismissed because of a lack of facts, lawmakers sought to prevent discrimination. The courts have always acknowledged that it is not necessary to extend this doctrine indefinitely. It is important to judge each criminal case on its merits. This is permitted by the sect if the proof is part of the same transaction. How accurate this is, however, is up to the discretion of the court. This is a more nuanced and ambiguous doctrine, and this is the difference.

There is sharp criticism of the ambiguity of this doctrine. But we can see that only the measures taken to form Res Gestae meant what initially began. Now all acts or comments made to commit a crime at the same time or in a single scene of the crime. Or at varying moments at different times. The position is considered part of the same transaction, so it is permitted in compliance with the concept of Res Gestae. Dean Wigmore said: “The term Res Gestae is not only totally useless, but also positively harmful under current law.” Never should this be discussed.

Authors: Alan John Abraham

Editor: Kanishka Vaish, Editor, LexLife India.

Explained: Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019

Reading time: 6-8 minutes.

The Union Cabinet recently approved various amendments to the Insolvency and Bankruptcy Code (IBC) during its recent meeting on 11th December, 2019; these have been brought about through the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019.

The main aim of the amendments is to remove hiccups arising during the insolvency resolution process and make it all the more smoother in order to achieve the objective of the Code.

The amendments also seek to make it convenient to do business; the changes have been brought about to help with investment, especially in those sectors which are currently facing trouble, as well as to protect all the corporate debtors while additionally also preventing bankruptcy proceedings filed out of malice or incomplete information.

The amendments approved by the cabinet mainly seek to reconstitute sections 5(12), 5(15), 7, 11, 14, 16(1), 21(2), 23(1), 29A, 227, 239, 240, and insert new section 32A in the Insolvency and Bankruptcy Code, 2016.

These amendments will basically seek to redress bottlenecks, align the Corporate Insolvency Resolution Process (CIRP) while also providing security to last mile funding to inject and promote investments in financially insecure sectors.

Background in brief: Why is the change being made?

The Insolvency and Bankruptcy Code, 2016 (Code) is one of the most essential steps taken by the Government in order to deal with the manifold increase in the level of distressed debts occurring in India.

This Code provides for a time-bound insolvency resolution process for delinquent corporate debtors and at the same time replaces it with a creditor-in-possession model in which a committee of creditors (CoC) is set up to take decisions regarding the operations of the corporate debtor, which also includes evaluating prospective resolution plans for resolving the corporate debtor’s account.

This Code was an exceptional step towards resolution of stressed assets. However, particular exigent inconsistencies and gaps became glaringly evident when several legal proceedings were initiated with corporate insolvency resolution processes (CIRP), making it all the more necessary to furnish amendments to bridge these gaps.

The amendment was also urgent and the need of the hour in light of the fact that there have been various judicial decisions as well as cases, pending and ongoing, which are being viewed as antithetical to the Code’s enshrined objective of protecting the creditors and debtors.

To mainly address some of these issues, the cabinet passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 which, when approved by the President, will become effective from such date that the Central Government may notify and will hopefully bridge the gap between the discrepancies.

Salient features

  • This amendment is broadly being brought about to the Insolvency and Bankruptcy Code (IBC) to secure resolution applicants from criminal proceedings against offences that may have been committees by previous managements or promoters by insertion of the new Section 32A, which is one of its major features. It will “ring-fence” victorious bidders from any offences committed by the management prior to them while providing speedy and assured resolution mechanism to reassure buyers of any stressed assets which are involved.
  • It will also put in place additional thresholds for financial creditors being represented by authorized representatives to tackle frivolous initiation of the resolution process, thereby putting in place a secure mechanism.
  • It also takes care that the base of a corporate debtor’s business will not be threatened by frivolous issues and can continue to be hassle free by keeping licenses, permits, concessions, clearances, etc. updated and ensuring that these can neither be terminated or suspended, nor their renewal denied during the moratorium period.
  • This amendment will also prevent government agencies from attaching the assets of an insolvent debtor who is engaged in the bankruptcy resolution process for any prior offences, which in turn, will make the stressed asset more favorable for potential buyers. These features have been included to help companies such as Bhushan Power, REI Agro and Rotomac Global and their like which are undergoing the process of insolvency resolution.
  • This amendment also provide that a financial entity, which is under the regulation of a financial sector, will no longer be considered a related party to the corporate debtor just because it had acquired shareholding through a conversion of debt into equity or instruments convertible into equity shares. This change would ensure that they are not barred from resolution process because of such a relation.
  • The Bill also aims to amend the Code to provide some minimum thresholds for particular strata of financial creditors to set off the insolvency resolution process.  With regard to real estate projects, if an allottee (person to whom a plot, apartment, or building has been allotted to or sold) wants to initiate a resolution proceeding, the application should be filed jointly by at least 100 allottees of the same real estate project or 10% of the total allottees under that project, whichever is less.

Critical analysis

  • Under the original Code, if the insolvency resolution process (IRP) is not appointed in the order admitting application under section 7, 9 or 10, the insolvency commencement date shall be the date on which such IRP is appointed.

The  second amendment removes this clause and goes back to the start, to ensure that CIRP shall be taken to begin from the date of admission and not from date of appointment of IRP, in case the two differ.

  • While Section 11 of the Code does not categorically stop a corporate debtor from initiating insolvency against another, there were some discrepancies wherein this right of the corporate debtor tended to be denied by the Adjudicating Authority/ Appellate Authority. In order to establish the particular objective and to remove the anomaly arising regarding the validity of an application of a corporate debtor against another corporate debtor, this Amendment Bill provides the said intent
  • In order to provide ease of doing business and make sure that a corporate debtor is able to hold his status even after commencement of CIRP, the Amendment Bill provides for protection of the corporate debtor from suspension and/ or termination of its licenses/ permits/ concession, in cases where such suspension or termination takes place just because of initiation of insolvency proceedings. This comes with a condition that the corporate debtor should have made no defaults in payment for such benefits during the moratorium period
  • This amendment completely removes the liability of a corporate debtor with respect to any offences committed prior to the commencement of CIRP, subject to certain conditions.
  • Under the said amendment, the Central Government is empowered to make certain rules with regard to the changes occurring in the Bill; the Central Government will, by way of rules, prescribe the transactions, on completion of which the financial creditor will not be treated as related party of corporate debtor.

Conclusion

The Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 continues to make great strides in the legislative arena to deal with issues that keep cropping up in relation to stressed companies or those undergoing resolution proceedings.

By providing means to identify last mile funding cases as interim finance, the Amendment helps to rehabilitate stressed entities in a regulated manner while safeguarding interests of both the sides. Further, by increasing the scope of moratorium, the Amendment protects the sanctity of the rescue operations as envisaged by the IBC.

Separately, the immunity granted in terms of various provisions enshrined shall act as a facilitator for cleaner acquisitions, thereby incentivizing higher bids and promoting an investor-friendly regime.

Author: Akanksha Batra from Symbiosis Law School, Pune

Editor: Ismat Hena from Faculty of Law, Jamia Millia Islamia.

Extending the Fiduciary Duty of Loyalty: Item Software (UK) Ltd v. Fassihi

Reading time: 11-12 minutes.

In Item Software (UK) Ltd v. Fassihi, the Court of Appeal considered two issues. Firstly, it determined whether or not a company director was in breach of his fiduciary duty of loyalty by failing to disclose his own misconduct to the company, and secondly, if an employee was entitled to claim his remuneration to the date of his dismissal notwithstanding the fact that the date for the payment of that remuneration had not been reached. Lady Justice Arden clarified the law by utilizing policy doctrine and extended the fiduciary duty of loyalty to disclosure of a director’s own misconduct. In relation to the second issue, the Court ruled that the director could make a time-apportioned claim for his salary under the Apportionment Act, 1870. This article primarily focuses on the first issue.

What are the facts of the case?

Item Software Ltd (UK) (Claimant) distributed software products and at the relevant time, a major part of the Item’s business was the distribution of software products to Isograph Ltd. The directors of Item included Mr. Fassihi (Defendant) and Mr. Dehghani. The defendant was employed from 1 May 1995 and the contract expressly provided that Mr. Fassihi should not use confidential information belonging to Item for his own purposes.

In November 1998, Item attempted to negotiate more favourable terms with Isograph. Mr. Fassihi encouraged Mr. Dehghani to press Isograph for improved terms. At the same time, Mr. Fassihi secretly approached Isograph with his own proposals which involved establishing his own company, RAMS International Ltd. (RAMS), to take over the contract. On 24 April 1999, Mr. Fassihi had sent a fax to Isograph referring to RAMS and urged Isograph to accept a conditional notice to terminate the existing distribution arrangements which Item had given.

In the end, the negotiations between Item and Isograph failed because Item insisted on terms that Isograph was not prepared to accept. Item then discovered the defendant’s misconduct and Mr. Fassihi was summarily dismissed on 26 June 1999. Item brought proceedings against Mr. Fassihi alleging that he was in breach of his duty as a director and employee in seeking to divert the contract with Isograph to RAMS and for having pressed Mr. Dehghani to take a hard line in the negotiations with Isograph with the intention of improving RAMS’ chances of securing the contract. Both these claims failed before the judge in the trial. However, Item succeeded on a further allegation that Mr. Fassihi was in breach of his duty in failing to disclose to Item his own wrongdoing.

What did the court decide?

During the trial, Item couldn’t not succeed in the diversion or sabotage issues as the judge found that, in the negotiations with Isograph, Item insisted on terms that Isograph was not prepared to accept. This was deemed to be the cause of failure of the negotiations. Furthermore, Mr. Fassihi was the sales and marketing director of Item and it appeared from the facts that he may have had day-to-day responsibility for the trading relationship with Isograph but not the responsibility for strategic business decisions regarding that relationship.

There was nothing to suggest that Mr. Dehghani would have negotiated more cautiously if Mr. Fassihi had not pressed him to seek better terms. In relation to the crucial issue of law, namely: “whether, in addition to Mr. Fassihi’s breach of duty in seeking to divert Item’s main contract to his new company, the failure to disclose that misconduct to  Item was a further breach of duty”, it was held by the trial judge that Mr. Fassihi’s misconduct did give rise to a superadded duty of disclosure as in Syborn Corpn v. Rochem Ltd, there was a separate and independent aspect of his duties which required him to disclose the facts. Furthermore, the judge stated that there was a clear case of fraudulent concealment as Mr. Fassihi had failed to tell Mr. Dehghani of what he had done, while remaining involved in the negotiations with Isograph and was part and parcel of his dishonest scheme to rob his employers of their business.

The judge argued that the director owes fiduciary duties to the company for reasons given in Horcal Ltd v. Gatland and it is difficult to justify how a director who was making profit by appropriating the company’s contract for his own benefit would not be under duty to disclose what he had done. This scenario is distinguishable from the one in Bell v. Lever Bros Ltd due to the fact that Mr. Fassihi was a director of Item as well as an employee. Therefore, the non-disclosure of Mr. Fassihi’s conduct was a breach of duty.

On appeal, L.J. Arden states that in relation to the disclosure issue, she considers the position of Mr. Fassihi as a director because a director is not simply a senior manager of the company and the duties of a director are in general higher than those imposed by law on an employee and disagrees with the trial judge’s superadded duty of disclosure by stating that a fiduciary does not owe a separate and independent duty to disclose his own misconduct to his principal.

However, she observed that this case is based on the fundamental duty a director is subject to, that is the duty to act in what he in good faith considers to be in the best interests of the company. Furthermore, the duty of loyalty is a time-honoured rule that focuses on principle rather than the particular words which have been used previously. This principle is dynamic and it reflects the flexible quality of the doctrines of equity. The fact that the duty of loyalty has never before been applied so as to require a fiduciary to disclose his own misconduct was not a good objection to the application of the fiduciary principle.

Based on this policy doctrine, the Court of Appeal held that there is no basis on which the defendant could reasonably have come to the conclusion that it was not in the best interest of Item to know of his breach of duty and Mr. Fassihi could not fulfil his duty of loyalty except by informing Item about RAMS, and his plan to acquire the Isograph contract for himself.

In relation to the apportionment issue, the court observed that, if section 2 of the 1870 Act applies, Mr. Fassihi is free to claim that part of his June salary (1 to 26 June) as his employment contract contained no provision which expressly excluded the operation of the 1870 Act. Furthermore, the Court distinguishes this case from the case of Boston Deep Sea Fishing And Ice Company v. Ansell, by observing that in the Boston case there was no attempt to rely on the 1870 Act and therefore it is not an authority as to the effect of the 1870 Act. To conclude, L.J. Arden allowed the appeal and held that none of the authorities cited, detracts from the interpretation to sections 2 and 3 of the 1870 Act and based on that interpretation Mr. Fassihi can make a time-apportioned claim for his salary for the period 1 to 26 June.

What can be made out of this judgement?

The fiduciary duty of loyalty has been a source of debate among academics. It is argued by some that the requirement of loyalty is subjective as it requires fiduciaries to exercise their judgement in a manner, which they subjectively believe to be in the best interests of the beneficiary, while others have argued that the duty of loyalty is best understood as the summation of the various doctrines that are applied peculiarly to fiduciaries, rather than as a legal duty that is directly enforceable on its own right.

In the case of Item Software Ltd where full disclosure was seen as an extension of the fiduciary duty of loyalty; the Delaware court, in the case of Malone v. Brincat, where it was established that absolute honesty was required from the fiduciaries; the Canadian Court, which adopted the English approach and the Scottish Court, where the question of full disclosure being a part of the fiduciary duty of loyalty was left open.

The Australian Courts seem to be an outlier as they have rejected this proposition. They view the fundamental duty of loyalty as proscriptive by nature and this stance does not easily accommodate a duty of full disclosure as a primary fiduciary obligation. According to the Australian Courts, the fiduciary obligation of loyalty is exhausted by the proscriptive ‘no conflict’ and ‘no profit’ rules. In contrast to the Australian Courts, academics and legal scholars have observed the importance of this extension of the fiduciary duty of loyalty.

For example: Licht argues that the common law regime of fiduciary loyalty implements a dual-pronged approach that ensures certain outcomes. The first prong i.e. the prohibition of any pursuit of self-interest aims to counteract self-interestedness and the second prong, which requires full disclosure by the fiduciary aims to combat information asymmetries.

Academics like Lee have claimed that there is a directional element in fiduciary obligations that includes a duty to act solely for the benefit of the principal. This directional element was explained in Item Software, when the court described the director’s duty to act in the company’s best interests. Furthermore, Lee explains that this duty consists of a duty to act in the sole interests of the company as the fiduciary obligations are not result-oriented and do not specify a particular standard to be attained by the fiduciary. She further argues that this positive, directional element of fiduciary obligation was seen in the case of Regal (Hastings) Ltd v Gulliver, where the House of Lords found the directors liable to account to the company for their profits due to the fact that the directors has made use of those fiduciary positions to make those profits.

It is argued that it was enough that the fiduciary used its fiduciary position to make a profit for itself and it did not matter that it had not been shown that the interests of the principal had been adversely affected. However, some academics are not convinced by the best interests duty applied in Item Software. Edelman argues that the difficulty with the duty to act in the best interests is that the duty is extremely vague. Furthermore, it is observed that the extreme vagueness has generated much academic criticism such as  being unhistorical, simplistic, true in part only and misleading.

In conclusion…

The approach taken by L.J. Arden in the caseof Item Software started a chain reaction and various jurisdictions around the world adopted this approach. It is crucial to note that even though the court stated that the duty of disclosure was not an independent duty, it functioned in the exact way as it operated as a separate and additional source of liability. Furthermore, I believe that Mr. Fassihi was in clear breach of his fiduciary duty primarily due to the conflict of interest and his duty to not make (potential) secret profits. The court arguably erred by placing too much emphasis on the full disclosure aspect of the fiduciary duty of loyalty and should have adopted the Australian courts’ approach instead.

-This article is brought to you in collaboration with Priyam Raj Kumar from University of Edinburgh, Scotland.

Tips Industries Ltd. v. Wynk Music Ltd.: Points to be noted!

Reading time: 6-7 minutes.

In the month of May this year, a single judge bench of The Bombay High Court in the case of Tips Industries Ltd. v. Wynk Music Ltd. (Airtel) held that music streaming on internet and digital downloads don’t fall under the statutory licensing provision of the Copyright Act. In this article we will be discussing the impact of this judgement on the music industry in India and the law with respect to copyright in the field of online music streaming and digital download

In an era where the number of internet users is skyrocketing and one is getting the cheapest mobile data in the world, it is quite obvious that demand for various services involving internet will grow manifold. Music streaming apps is one such service. In the past few years a number of music streaming apps has gained prominence in India with Gaana, Wynk, Saavn, being the market leaders amongst others. Recently Amazon and YouTube also launched its music streaming services and global market leaders Spotify also made an entry to the Indian Market.

However, the law is not clear in this regard and some provisions of Copyright Act dealing with these aspects need clarity. In this particular case the major contention was related to the statutory licensing provision under Section 31D of the Copyright Act, 1957. This judgement is a landmark of sort as it has very well summed up the requirements of Section 31D and what qualifies to fall under the ambit of statutory licensing.

What exactly was the dispute?

The plaintiffs licensed its repertoire of about 25000 songs to the defendants by Copyright Society under a license agreement on 22nd August 2015. The license fee was paid, and license was valid till 31st August 2018. After the expiration of license both the parties went on for some rounds of negotiations for the renewal of licence; however, the talks failed.

Wynk was asked to deactivate the repertoire but they didn’t comply with it. Tips then sent a legal notice to Wynk to which Wynk replied that they are invoking Section 31D of the Copyright Act and claimed themselves to be the broadcasting organisation who are entitled to statutory licensing under Section 31D. Hence Tips chose to file this suit in the Bombay High Court.

What were the legal questions involved?

The court went on to peruse various case laws along with the provisions of the Copyright Act. The major question that arose here was related to the statutory licensing provision of the Copyright Act, the court looked over the section in question in detail and then went on to discuss the various aspects associated with it. The following three points were majorly discussed which pertains to the statutory licensing provision under Section 31D.

  • No Communication to the public:

The defendant claimed to invoke Section 31D of the Act as against the right to communicate the sound recording to the public. However, the plaintiff contended that Section 31D does not enable or permit a person to sell or commercially rent out sound recordings and these services of defendant do not fall within the scope of ‘communication to the public’.

The Court stated that the right to commercially rent and/ or sell a sound recording to the public is a separate and distinct right as against the right to communicate the sound recording to the public and thus rejected the claim of the defendant and held that the defendant cannot exercise a Statutory Licence under Section 31D in respect of the download and purchase features provided by them.

The Court, while deciding the matter, considered the legislative intention behind including the relevant provisions in the Act. The Court stated that right to commercially rent or to sell sound recording and any right to communicate sound recordings to the public are mentioned in two different provisions of the Act i.e., Section 14(1)(e)(ii) and 14(1)(e)(iii) respectively.

Thus, it is clear that the Legislature was well aware while enacting Section 31D and intentionally excluded commercial rental/ sale of sound recordings from the purview of Section 31D. This interpretation was based on the rationale put forward in 227th Report of Rajya Sabha Parliamentary Standing Committee on the Copyright (Amendment) Bill, 2010. The report clarifies about the awareness of the fact that recording through internet or legitimately digital downloading of music or video recording by payment cannot be covered under the ambit of communication to the public.

  • Internet broadcasters cannot exercise Statutory Licence:

While the Court and plaintiff acknowledged the fact that ‘on demand streaming services’ offered by the defendants amount to communication to the public. However, the plaintiff contended that such communication of the sound recording to the public amounts to infringement of the plaintiff’s exclusive right provided in Section 14(1)(e)(iii) of the Act since such act is not authorized by the plaintiff. The main contention of the defendants was that they are a broadcasting organization and that they have a statutory licence under Section 31D of the Act to communicate to the public by way of broadcast to the copyrighted sound recordings.

The question that stems now is that, whether a Statutory License under Section 31D is available to internet broadcasters such as the present defendants?

The plaintiff objected to this claim and argued that the grant of Statutory License under Section 31D is only restricted to radio and television broadcasting organisations and the defendants’ on demand streaming services offered through internet as an ‘internet broadcasting organisation’ do not fall within the purview of Section 31D of the Act.

The court rejected the claim of benefit of Section 31D and held that while including Section 31D, the legislature was under full knowledge of the existence of digital technologies and trends, including the sharing, streaming and downloading which has been discussed  in the 227th Report.

Therefore, the absence of express words in Section 31D providing for a Statutory License in respect of internet streaming and/or downloading, was a conscious legislative choice. Moreover, the Court relied on the judgements by the Supreme Court in Super Cassettes Industries v. Music Broadcast (2012) 5 SCC 488; UOI v. BCCI SC 2017 and State of MP v. Vishnu Prasad Sharma 1966 AIR 1593 which were in respect of expropriatory legislations and reiterated that Section 31D must be construed strictly in conformity with the specific intention for which it was enacted. Thus, the Court held that internet broadcasters do not qualify as broadcaster for the subject under Section 31D.

  • Royalty fixed by the Appellate Board is mandatory for Statutory Licence:

The Bombay High Court however did not limit its decision to the bare reading of the provisions of Section 31D and Section 14(1)(e)(iii) to decide the fate of the defendant’s right to communicate the sound recording to the public. The Hon’ble Court also stated that Section 31D cannot be used in isolation and further discussed that whether License under Section 31D can only be exercised upon fixation of the rate of royalty by the Appellate Board.

The Court stated that the Appellate Board being the creature of the said Act is empowered by the provision of Section 31D (3) to fix the rates of royalty for radio and television broadcasting. Further, there are two basic conditions that are mentioned in Section 31D (2) regarding copyrighted sound recordings that have to be used by the broadcasting organization. They are:

  • the notice to the owner of the copyright, and
  • to pay the royalties to the owner of copyright as per the rate fixed by the Appellate Body,

as the conditions are necessary for exercising the right to use the copyrighted sound recordings by the broadcasting organization, the Court whereby concluded that the License under Section 31D can only be exercised after the payment of the royalties at the rate fixed by the Appellate Body.

In conclusion…

It was observed by Justice Kathawalla that the 2012 Act is a modern statute, and hence the legislature was well aware about the existence of prevalent digital technologies and trends which is quite evident from statement of object but to be honest the number of streaming services and the number of users using these services were far less in 2012 so such thoughts might not have passed through the minds of the legislature, also the fact that the statutory licensing provision of the copyright is attracting controversies since 2012 cannot be denied. Tips v. Wynk is one such case and another major tussle is going on between Spotify and Warner Brothers which is being keenly observed by IP enthusiasts around the globe.

As per this  judgement the stance is clear that the music streaming service providers are required to get a license from the copyright holders which according to us is totally justified. However, what stance will be taken in the pending disputes in other High Courts is something which will be keenly watched. It will also be exciting to see whether Wynk will prefer an appeal in the Supreme Court and if it happens what stance will be taken by Supreme Court in this regard. In our opinion since these streaming services usually charge subscribers for various service and is not totally free of cost, they should pay the requisite royalty amount to the copyright holders.

-This article is brought to you in collaboration with Raja Reeshav Roy and Aniket Raj from National Law University, Jodhpur.