Seat / Venue of Arbitration not a determinative factor in attracting jurisdiction of a Writ Court: Delhi High Court

The Delhi High Court in Durgapur Freight Terminal P. Ltd. v. Union of India has recently held that an arbitration clause providing for seat / venue would not be a determinate factor for conferring jurisdiction on a writ court, if the court otherwise does not have jurisdiction in the traditional sense. The bench analysed the provisions of Article 226 of the Constitution of India, 1950 and also the concept of forum convenience, to hold that the courts at Delhi would not have jurisdiction as no part of cause of action has arisen in Delhi. The relevant observations of the bench, as as under:

11. In the writ petition, the petitioners have claimed jurisdiction of this Court in the following terms:-

"59. The present petition is maintainable before this Hon'ble Court inasmuch as the concerned respondents viz. respondent nos. 1 to 4 who took the decisions impugned are located within the territorial jurisdiction of this Hon'ble Court. Moreover the essential part of cause of action viz. decisions leading to the acts and/or omission including non- consideration of the petitioner's representation dated December 28, 2022 have taken place within the territorial jurisdiction of this Hon'ble Court."

12. Before proceeding further, it is deemed apposite to advert to clauses (1) and (2) of Article 226 of the Constitution of India, which read as under:-

"226. Power of High Courts to issue certain writs.--(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. 

(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories."

13. A reading of Clauses (1) and (2) of Article 226 of the Constitution of India would show that a High Court has territorial jurisdiction to issue writs under two situations: one, where the person/authority to whom the writ is to be issued is situated within the territory over which the High Court exercises jurisdiction, and two, where the cause of action, wholly or in part, arises for issuance of a writ within such territory. For the sake of convenience, the first may be referred to as 'jurisdiction by virtue of situs' and the other as 'jurisdiction by virtue of cause of action'.

14. In the instant case, the petitioners have claimed jurisdiction of this Court under both clauses of Article 226 of the Constitution of India. The tests to determine whether this Court has jurisdiction under these Clauses are well-defined. While before exercising jurisdiction by virtue of situs, this Court is required to arrive at a positive finding that the authority/person to whom the writ has to be issued lies within the territory over which the Court exercises jurisdiction; in order to exercise jurisdiction by virtue of cause of action, the Court shall be of the opinion that cause of action, wholly or in part, has arisen within the jurisdiction over which it exercises jurisdiction.

15. The Supreme Court in Utpal Kumar Basu and Others (Supra) has observed that the question as to whether the High Court has territorial jurisdiction to entertain a writ petition has to be decided on the basis of facts pleaded in the petition, the truth or otherwise thereof being immaterial. Relevant excerpt from the decision is extracted hereunder:-

"6. ...Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition. Therefore, the question whether in the instant case the Calcutta High Court had jurisdiction to entertain and decide the writ petition in question even on the facts alleged must depend upon whether the averments made in paragraphs 5, 7, 18, 22, 26 and 43 are sufficient in law to establish that a part of the cause of action had arisen within the jurisdiction of the Calcutta High Court."

16. The scope of Article 226(2) of the Constitution of India came to be analysed in depth in Kusum Ingots & Alloys Ltd. v. Union of India and Another reported as (2004) 6 SCC 254, where the Supreme Court observed thus:-

"9. Although in view of Section 141 of the Code of Civil Procedure the provisions thereof would not apply to writ proceedings, the phraseology used in Section 20(c) of the Code of Civil Procedure and clause (2) of Article 226, being in pari materia, the decisions of this Court rendered on interpretation of Section 20(c) CPC shall apply to the writ proceedings also. Before proceeding to discuss the matter further it may be pointed out that the entire bundle of facts pleaded need not constitute a cause of action as what is necessary to be proved before the petitioner can obtain a decree is the material facts. The expression material facts is also known as integral facts.

Retrospective Operation of the Benami Laws : The Confusion Remains!

Author : Saurabh Seth

The Benami Transactions (Prohibition) Act, 1988 (“Original Act”) was enacted in the year 1988 with the object of prohibiting benami transactions. A benami transaction in simple terms refers to a transaction where a person actually purchasing a property does not do so in his own name, and does so in the name of another person, who is merely a ‘name lender’ or a ‘benamidar’. Such person who pays consideration is commonly referred to as the ‘beneficial owner’.

The Original Act contained a mere 9 sections, including the power of acquisition of such benami property by an appropriate authority and also powers to prosecute offenders. Although the Original Act empowered the Central government to make rules under Section 8, no such rules were ever framed. Therefore, the Original Act was widely regarded as a “toothless” legislation, which though empowered the state to confiscate properties, was rarely used and most importantly, no procedure, rules or mechanism was prescribed to give effect to the provisions of the Original Act.

With the change of dispensation in Parliament, the then Finance Minister, Late Mr. Arun Jaitley, sought to “give teeth to” this “toothless” legislation by introducing the Benami Transactions (Prohibition) Amendment Act, 2016. The amendment was passed into law and came into force on 01.11.2016. The amended legislation was re-christened as the Prohibition of Benami Property Transactions Act, 1988 (“New Act”) and sought to amend the Original Act by adding as many as 72 sections and proper Rules for the effective implementation of the New Act.

But why did the government opt for amending the Original Act instead of enacting a fresh legislation? The reason is not far to see, and was explained by Late Mr. Jaitley in parliament in answer to a question where he categorically stated that:

“Anybody will know that a law can be made retrospective, but under Article 20 of the Constitution of India, penal laws cannot be made retrospective. The simple answer to the question why we did not bring a new law is that a new law would have meant giving immunity to everybody from the penal provisions during the period 1988 to 2016 and giving a 28 years immunity would not have been in larger public interest, particularly if large amounts of unaccounted and black money have been used to transact those transactions” 

But the question which arises is whether such a course is legally permissible? Can the legislature do something indirectly which it could not have done directly? The answer in my view is that such a course could not have adopted, especially given the strict provisions of the New Act, which have the effect of not only depriving a person of his property but also of initiation of criminal prosecution against a person found guilty under the New Act.

The Hon’ble Supreme Court has repeatedly held that amendment to a statute can be implemented retrospectively, however such retrospective amendment cannot defeat the substantive rights of a party. It is well recognized that generally amendments to procedural laws may be retrospective, but when substantive rights of parties are affected, can such laws be implemented retrospectively?

The New Act was notified vide Notification No. 98/2016 dated 25.10.2016, which appointed the 1st day of November, 2016 as the date on which the provisions shall come into force.

Section 1(3) remains untouched

Interestingly, the New Act keeps Section 1(3) of the Original Act untouched, which provided that:

“(3) The provisions of sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988.”

The aforesaid date of 19.05.1988 relates to the coming into force of the Presidential Ordinance whereas the date of 05.09.1988 relates to the date when the Original Act was brought into force. It is for this reason that Section 1(3) reads that Sections 3, 5 and 8 shall come into force at once.

In the New Act, Section 1(3) has been retained in its original form even though there are substantial amendments to Section 3, 5 and 8. The said provision creates an anomalous situation with the use of the words “shall come into force at once”. What date does this relate to is something that requires deep consideration particularly in view of the substantive amendments brought about to the aforesaid sections. A literal reading of the words “shall come into force at once” lends credence to the interpretation that the amendments to the said Section shall be effective only post 01.11.2016, thus making the provision prospective in its operation.

Substantive amendments in the New Act

Substantive changes have been made to various provisions of the Original Act, and there is no doubt that such amendments are not mere procedural amendments. In fact, substantive changes affecting the vital rights of persons have been made to the New Act, thus warranting a prospective operation. Some of these substantive changes are:

• Section 2(9) of the New Act expands the definition of “Benami Transaction” and brings within its fold certain transactions, which were hitherto not considered Benami. This certainly qualifies as a substantive change of the scope and operation of the New Act.
• Section 3 of the New Act seeks to make a distinction between transactions entered into prior to the New Act, by providing for a lesser punishment under Section 3(2) for past acts and a higher punishment under Chapter VII of the New Act for acts done after 01.11.2016. Such cases are covered by Section 3(3) of the New Act. This also leads us to the inevitable conclusion that the applicability of the new regime and punishment thereunder is only prospective.
• Section 5 read with Chapter IV of the New Act provide for attachment, adjudication and confiscation of the properties under the New Act. Under the Original Act, though the provision for confiscation was present, however, the same was to be undertaken in terms of the procedure and rules prescribed. It is an admitted position that no rules were ever framed or brought into force for the said purpose.
• Thus even though the substantive provision for confiscation was present under the Original Act, the absence of rules framed thereunder would certainly militate against the prescription of the detailed procedure now laid down [and rules framed] under the New Act. This, some may argue, is directly contrary to Article 20 of the Constitution of India, 1950 as Section 5 (without rules) of the Original Act was the “law in force” for transactions prior to 01.11.2016.
• Even Chapter IV of the New Act tends to disturb various vested rights of persons, as it gives the Initiating Officer under the New Act the power to provisionally attach properties even before adjudication proceedings.
• Various levels of the adjudication have been introduced under the New Act, which never existed earlier. Though these changes may be termed as “procedural”, the fact remains that creating layers of appeals, which were non existent earlier, certainly represents substantive amendment affecting vested rights of parties.
• Chapter VII of the New Act prescribes penalties, which were non existent under the Original Act. These penalties cannot by any stretch of imagination be applied retrospectively, and any such misadventure would fall foul of Article 20 of the Constitution of India, 1950.

Interpretation by the High Courts

The question of whether the amendments brought about in the form of the New Act are to be applied prospectively or retrospectively have vexed various High Courts throughout the Country. So far there is unanimity of judicial opinion [barring one] that the provisions of the New Act are to be applied prospectively. Some of these decisions are being noted hereunder:

1. Joseph Isharat v. Rozy Nishikant Gaikwad 2017 (5) ABR 706, where the Bombay High Court held:

“7. What is crucial here is, in the first place, whether the change effected by the legislature in the Benami Act is a matter of procedure or is it a matter of substantial rights between the parties. If it is merely a procedural law, then, of course, procedure applicable as on the date of hearing may be relevant. If, on the other hand, it is a matter of substantive rights, then prima facie it will only have a prospective application unless the amended law speaks in a language “which expressly or by clear intention, takes in even pending matters.”. Short of such intendment, the law shall be applied prospectively and not retrospectively.

“8. As held by the Supreme Court in the case of R. Rajagopal Reddy vs. Padmini Chandrasekharan, Section 4 of the Benami Act, or for that matter, the Benami Act as a whole, creates substantive rights in favour of benamidars and destroys substantive rights of real owners who are parties to such transaction and for whom new liabilities are created…These observations clearly hold the field even as regards the present amendment to the Benami Act. The amendments introduced by the Legislature affect substantive rights of the parties and must be applied prospectively.”

[Note: SLP [C] No. 12328 of 2017 against this judgment was dismissed by the Hon’ble Supreme Court by its order dated 28.04.2017]

2. Mangathai Ammal [Died] through LRs & Ors. Vs. Rajeshwari & Ors. [2019 SCC OnLine SC 717] dated 09.05.2019, where Hon’ble Supreme Court observed:

“12. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction [Prohibition] Act 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act, 2016, Section 3 [2] of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the respondents that therefore in view of omission of Section 3[2] of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Aforesaid cannot be accepted. As held by this Court in the case of Binapani Paul [supra] the Benami Transaction Act would not be applicable retrospectively?”

3. Niharika Jain V. Union of India & Ors. 2019 SCC On Line Raj 1640, dated 12.07.2019, wherein the Rajasthan High Court observed:

“93. … this Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1st November, 2016, i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect.

94. It is made clear that this Court has neither examined nor commented upon merits of the writ applications but has considered only the larger question of retrospective applicability of the Benami Amendment Act, 2016 amending the original Benami Act of 1988. Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1st November, 2016; would be prospective and not retrospective.”

4. M/s Ganpati Delcom Private Limited v. Union of India & Anr. (APO no. 8 of 2019 with WP no. 687 of 2017, decision dated 12.12.2019), wherein the Hon’ble Calcutta High Court held as under:

“In Canbank Financial Services Ltd vs Custodian & Others reported in (2004) 8 SCC 355 the Supreme Court specifically held in paragraph 67 that the said Act of 1988 had not been made workable as no rules under Section 8 of the said Act for acquisition of benami property had been framed. These two cases were also cited by Mr. Khaitan. Section 6(c) of the General Clauses Act, 1897 is most important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”, unless a different intention is expressed by the legislature. Without question, the omission on the part of the government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central government, in the absence of enabling procedural rules. It is well within the right of the appellant to contend that the Central government had waived its rights. It could also contend that no criminal action could be initiated on the ground of limitation. Now, these rights which had accrued to the appellant could not, in the absence of an express provision be extinguished by the amending Act of 2016. In other words, applying the definition of benami property and benami transaction the Central government could not, on the basis of the 2016 amendment allege contravention and start the prosecution in respect of a transaction in 2011.”

[Note: The Hon’ble Supreme Court in SLP (C) No. 2784 of 2020 has stayed the said the above judgment. The SLP remains pending.]

Contrary view of Chhattisgarh High Court

5. Tulsiram & Manki Bai V. ACIT (Benami Prohibition) & Ors. (W. P. No. 3819/2019), dated 15.11.2019, wherein the Chhattisgarh High Court held:

“20. … It can also not to be said that provisions of the Amended Act of 2016 could not have been made applicable in respect of properties, which were acquired prior to 01.11.2016. The whole Act of 1988 as it stands today inclusive of the amended provisions brought into force from 01.11.2016 onwards applies irrespective of the period of purchase of the alleged Benami property. Amended Act of 2016 does not have an existence by itself. Without the provisions of the Act of 1988, the amended provisions of 2016 has no relevance and the amended Provisions are only laying down the proceedings to be adopted in a proceeding drawn under the Act of 1988 and the penalties to be imposed in each of the cases taking into consideration the period of purchase of Benami property.”

Conclusion:

The amendments made by way of the New Act, in my view, are clearly substantive and not procedural in nature, and hence cannot be applied retrospectively. The New Act expands the scope of the law, casts a negative burden / onus on a person to prove that a property is not “benami property”, creates disabilities such as immediate attachment and subsequent confiscation and most importantly attracts criminal action. All these aspects lead to the inescapable conclusion that the New Act cannot and should not be applied retrospectively.

The golden words of the Hon’ble Supreme Court in Commissioner of Income Tax (Central)- I, New Delhi vs. Vatika Township Private Limited (2015) 1 SCC 1 that “The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of the day in force and not tomorrow’s backward adjustment to it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset”, are clearly applicable to the present situation.

The views taken by the various High Courts as highlighted above correctly lay down this position of law, and now all eyes will be on the Hon’ble Supreme Court to take a final view on this issue – once and for all. Till then the confusion remains!

Saurabh Seth, the author, is a practicing advocate in the Delhi High Court. The views expressed are personal to the author.

120 day Statutory Period for filing Written Statement 'Mandatory' under the Commercial Courts Act: Supreme Court Holds

(Justice Nariman (Left) and Justice Saran (Right)
Hon'ble Judges, Supreme Court of India

A bench of Justice Nariman and Justice Saran of the Hon'ble Supreme Court has held in SCG Contracts India P. Ltd. v. K.S. Chamankar Infrastructure P. Ltd. that the provisions of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 with regard to filing of written statements within 120 days from date of service of summons is mandatory and any delay beyond 120 days cannot be condoned by the Court. While holding so, the bench observed as under:

8) The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 came into force on 23.10.2015 bringing in their wake certain amendments to the Code of Civil Procedure. In Order V, Rule 1, sub-rule (1), for the second proviso, the following proviso was substituted:

“Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other days, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” Equally, in Order VIII Rule 1, a new proviso was substituted as follows:

“Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred and twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” This was re-emphasized by re-inserting yet another proviso in Order VIII Rule 10 CPC, which reads as under:-

“Procedure when party fails to present written statement called for by Court.- Where any party from whom a written statement is required under Rule 1 or Rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on pronouncement of such judgment a decree shall be drawn up.

Provided further that no Court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written statement.” A perusal of these provisions would show that ordinarily a written statement is to be filed within a period of 30 days.

However, grace period of a further 90 days is granted which the Court may employ for reasons to be recorded in writing and payment of such costs as it deems fit to allow such written statement to come on record. What is of great importance is the fact that beyond 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record. This is further buttressed by the proviso in Order VIII Rule 10 also adding that the Court has no further power to extend the time beyond this period of 120 days.

9) In Bihar Rajya Bhumi Vikas Bank Samiti (supra), a question was raised as to whether Section 34(5)of the Arbitration and Conciliation Act, 1996, inserted by Amending Act 3 of 2016 is mandatory or directory. In para 11 of the said judgment, this Court referred to Kailash vs. Nanhku, (2005) 4 SCC 480 referring to the text of Order 8 Rule 1 as it stood pre the amendment made by the Commercial Courts Act. It also referred to the Salem Advocate Bar Association vs. Union of India, (2005) 6 SCC 344, which, like the Kailash judgment, held that the mere expression “shall” in Order 8 Rule 1 would not make the provision mandatory. This Court then went on to discuss in para 17 State vs. N.S. Gnaneswaran, (2013) 3 SCC 594 in which Section 154(2) of the Code of Criminal Procedure was held to be directory inasmuch as no consequence was provided if the Section was breached. In para 22 by way of contrast to Section 34, Section 29-A of the Arbitration Act was set out. This Court then noted in para 23 as under:

“23. It will be seen from this provision that, unlike Sections 34(5) and (6), if an award is made beyond the stipulated or extended period contained in the section, the consequence of the mandate of the arbitrator being terminated is expressly provided. This provision is in stark contrast to Sections 34(5) and (6) where, as has been stated hereinabove, if the period for deciding the application under Section 34 has elapsed, no consequence is provided. This is one more indicator that the same Amendment Act, when it provided time periods in different situations, did so intending different consequences.”

10) Several High Court judgments on the amended Order VIII Rule 1 have now held that given the consequence of non-filing of written statement, the amended provisions of the CPC will have to be held to be mandatory. [See Oku Tech Private Limited vs. Sangeet Agarwal & Ors. by a learned Single Judge of the Delhi High Court dated 11.08.2016 in CS (OS) No. 3390/2015 as followed by several other judgments including a judgment of the Delhi High Court in Maja Cosmetics vs. Oasis Commercial Pvt. Ltd. 2018 SCC Online Del 6698.

11) We are of the view that the view taken by the Delhi High Court in these judgments is correct in view of the fact that the consequence of forfeiting a right to file the written statement; non-extension of any further time; and the fact that the Court shall not allow the written statement to be taken on record all points to the fact that the earlier law on Order VIII Rule 1 on the filing of written statement underOrder VIII Rule 1 has now been set at naught.

12) However, learned counsel appearing for the respondents relied strongly upon the judgment in Bhanu Kumar Jain (supra) and Shaikh Salim Haji Abdul Khayumsab (supra) and, in particular, paras 22 and 27 of the first judgment and paras 4 & 19 of the second judgment.

13) We are of the view that since both these judgments dealt with the pre-amendment position, they would not be of any direct reliance insofar as the facts of the present case is concerned.

14) Learned counsel appearing for the respondents also relied upon R.K. Roja vs. U.S. Rayudu and Another (supra) for the proposition that the defendant is entitled to file an application for rejection of plaint under Order VII Rule 11 before filing his written statement. We are of the view that this judgment cannot be read in the manner sought for by the learned counsel appearing on behalf of the respondents. Order VII Rule 11 proceedings are independent of the filing of a written statement once a suit has been filed. In fact, para 6 of that judgment records “However, we may hasten to add that the liberty to file an application for rejection under Order 7 Rule 11 CPC cannot be made as a ruse for retrieving the lost opportunity to file the written statement”.

15) Learned counsel appearing for the respondents then argued that it cannot be assumed that the learned Single Judge did not know about these amendments when he passed the first impugned order dated 05.12.2017. We do not wish to enter upon this speculative arena. He then argued that since this judgment permitted him to file the written statement beyond 120 days, it was an act of the Court which should prejudice no man. This doctrine cannot be used when the res is not yet judicata. The 05.12.2017 order is res sub judice inasmuch as its correctness has been challenged before us.

16) Learned counsel for the respondents then strongly relied upon the inherent powers of the Court to state that, in any case, a procedural provision such as contained in the amendment, which may lead to unjust consequences can always, in the facts of a given case, be ignored where such unjust consequences follow, as in the facts of the present case. We are again of the view that this argument has also no legs to stand on, given the judgment of this Court in Manohar Lal Chopra vs. Rai Bahadur Rao Raja Seth Hiralal, [1962] Suppl 1 SCR 450. In this judgment, the Court held:

“The suit at Indore which had been instituted later, could be stayed in view of s.10 of the Code. The provisions of that section are clear, definite and mandatory. A Court in which a subsequent suit has been filed is prohibited from proceeding with the trial of that suit in certain specified circumstances.

When there is a special provision in the Code of Civil Procedure for dealing with the contingencies of two such suits being instituted, recourse to the inherent powers under s.151 is not justified...” (at page 470) Clearly, the clear, definite and mandatory provisions of Order V read with Order VIII Rule 1 and 10 cannot be circumvented by recourse to the inherent power under Section 151 to do the opposite of what is stated therein.

17) Clearly, therefore, the 05.12.2017 order which applies in the face of the amendments made to the Civil Procedure Code cannot be sustained. When we come to the second order dated 24.09.2019, the only reason for this order is that 05.12.2017 has attained finality.

18) Factually speaking, this is not correct as a Special Leave Petition from the said order has been filed. Even otherwise, this Court in Canara Bank vs. N.G. Subbaraya Setty and Anr. (supra) has held (page 3414):

“(ii) An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to. This is despite the fact that the matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding. This is for the reason that in such cases, the rights of the parties are not the only matter for consideration (as is the case of an erroneous interpretation of a statute inter parties), as the public policy contained in the statutory prohibition cannot be set at naught.

This is for the same reason as that contained in matters which pertain to issues of law that raise jurisdictional questions. We have seen how, in Natraj Studios (AIR 1981 SC 537) (supra), it is the public policy of the statutory prohibition contained in Section 28 of the Bombay Rent Act that has to be given effect to. Likewise, the public policy contained in other statutory prohibitions, which need not necessarily go to jurisdiction of a Court, must equally be given effect to, as otherwise special principles of law are fastened upon parties when special considerations relating to public policy mandate that this cannot be done.” The aforesaid para applies on all fours to the facts of the present case, as even assuming that the 05.12.2017 order is final, res judicata cannot stand in the way of an erroneous interpretation of a statutory prohibition. The present is one such case. Therefore, the second order must also be set aside.

Retrospectivity of amendments to the Arbitration & Conciliation Act, 1996 : Delhi High Court Rules

Justice B.D. Ahmad
Former Judge, Delhi High Court
(Now Chief Justice J & K High Court)

In a landmark decision, the Division Bench of the Delhi High Court in Ardee Infrastructure Pvt. Ltd. v. Anuradha Bhatia, has opined that the unamended provisions of the Arbitration & Conciliation Act, 1996 would apply to arbitrations commenced (in terms of Section 21 of the Arbitration & Conciliation Act, 1996) prior to 23.10.2015. While holding so, the Division Bench has held as under:

3. The controversy is with regard to the application of the amended provisions of the said Act. The amendments to, inter alia, Sections 34 and 36 of the said Act were brought about by the Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the Amending Act') with retrospective effect from 23.10.2015. It is the case of the petitioners that the petitions under Section 34 of the said Act would be governed by the unamended provisions of, inter alia, Sections 34 and 36 and, therefore, the petitioners would have the right of an automatic stay on the filing of the petitions under Section 34 of the said Act. On the other hand, the respondents argue that the amended provisions would apply and, therefore, there would be no question of any automatic stay and that it was well within the powers of the learned single Judge to have required the petitioners to make a deposit of Rs 2.7 crores and to direct that in case such a deposit was not made, the petitions under Section 34 of the said Act would be liable to be dismissed.

4. We may point out that the notice invoking the arbitration clause was given by the respondents on 07.06.2011. The statement of claim was filed in February 2013 and an interim award was made on 10.07.2014. The final award was made by the arbitral tribunal on 13.10.2015. The petitions under Section 34 objecting to the award were, as mentioned earlier, filed on 04.01.2016. In the meanwhile, the amendments to, inter alia, Sections 34 and 36 were introduced by the Amending Act with retrospective effect from 23.10.2015. Section 26 of the Amending Act, on which the controversy mainly hinges, reads as under:-

"26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act."

5. At this juncture, it would be necessary to also set down the differences in Section 36 of the said Act, pre and post-amendment:- Pre-amendment Post-amendment 36. Enforcement. - Where 36. (1) Where the time for the time for making an making an application to set application to set aside the aside the arbitral award under arbitral award under section section 34 has expired, then, 34 has expired, or such subject to the provisions of application having been sub-section (2), such award made, it has been refused, the shall be enforced in award shall be enforced accordance with the under the Code of Civil provisions of the Code of Procedure, 1908 (5 of 1908) Civil Procedure, 1908, in the in the same manner as if it same manner as if it were a were a decree of the Court. decree of the court. (2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub- section (3), on a separate application made for that purpose. (3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing: Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908.

6. There is no dispute with the proposition that if the pre-amendment provisions of Section 36 of the said Act were to apply, the very filing and pendency of a petition under Section 34would, in effect, operate as a stay of the enforcement of the award. This has been materially changed by virtue of the amendment brought about in Section 36 of the said Act. The post-amendment scenario is that where an application to set aside an arbitral award is filed under Section 34 before a court, the filing of such an application would not by itself render the award non-enforceable unless the court granted an order of stay of operation of the arbitral award in accordance with the provisions of Section 36(3) on a separate application made for that purpose. Sub-section (3) of Section 36 stipulates that upon the filing of an application for stay of operation of the arbitral award, it would be open to the court, subject to such conditions, as it may deem fit, to grant stay of operation of the award for the reasons to be recorded in writing. The proviso thereto requires the court, while considering the application for grant of stay in the case of an arbitral award for payment of money, to have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908.

7. According to the learned counsel for the petitioners, this change in law with regard to the enforcement of an award under Section 36 of the said Act tends to take away vested rights. Therefore, the provisions of Section 6 of the General Clauses Act, 1897 would be applicable. Section 6 of the General Clauses Act, 1897 reads as under:-

6. Effect of repeal. - Where this Act, or any [Central Act] or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not-
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

8. It was submitted in the context of Section 6 of the General Clauses Act that a repeal of an enactment would not affect any right acquired or accrued under the repealed enactment, unless a different intention appears in the repealing Act. It was contended that Section 26 of the Amending Act does not express any intention of retrospective application prior to 23.10.2015. It was further submitted that under the old provision, there was no requirement for a party objecting to the award and seeking the setting aside of the award to separately ask for stay of the award. The mere filing of the petition under Section 34 of the said Act entailed an automatic stay of the enforcement of the award. That vested right of automatic stay is no longer available under the new Section 36. This, according to the learned counsel for the petitioners, would operate only prospectively, that is, to arbitral proceedings commenced after 23.10.2015 and not to arbitrations commenced prior to 23.10.2015.

9. It was further contended on the strength of the Supreme Court decision in the case of Hitendra Vishnu Thakur and Others etc. etc. v. State of Maharashtra and Others: 1994 (4) SCC 602 that a statute which affects substantive rights is presumed to be prospective in operation, unless made retrospective, either expressly or by necessary intendment. Furthermore, the law relating to forum and limitation is procedural in nature, whereas the law relating to action and right of appeal, even though remedial, is substantive in nature. This, according to the learned counsel for the petitioners, would cover petitions under Section 34 of the said Act.

10. The Supreme Court decision in Jose Da Costa and Another v. Bascora Sadasiva Sinai Narcornim and Others: 1976 (2) SCC 917 was also referred to by the learned counsel for the petitioners to contend that the provisions which touch a right in existence at the time of passing of a statute, are not to be applied retrospectively in the absence of express enactment or necessary intendment.

11. Reliance was also placed on Thirumalai Chemicals Limited v. Union of India and Others: 2011 (6) SCC 739, wherein it was held that though it may be true that amendments to procedural laws can be applied retrospectively, procedural statutes which affect the rights of the parties, cannot be applied retrospectively.

12. In this backdrop, it was submitted by the learned counsel for the petitioners that substantive rights of the petitioners have been affected by the amendments brought about by the Amending Act. For instance, the new provision of Section 34 restricts the scope for challenge to an award as compared to the earlier provisions of Section 34. Secondly, the new Section 36 takes away the right of automatic stay which existed under the old Section 36. This is so as now a party has to seek a stay by way of an application under Section 36(2) of the new provisions and conditions could be imposed on the parties even where the court grants a stay of the enforcement of the award.

13. It was next contended by the learned counsel for the petitioners that Section 26 of the Amending Act does not indicate any intention of retrospective application of the amended provisions.

14. On behalf of the respondents, it was contended that Section 26 of the Amending Act needs to be compared with Section 85(2)(a) of the said Act. The following table sets out the two provisions:-

Pre-amendment

Post-amendment

36. Enforcement.—Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court.

“36. (1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court. (2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose. (3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing: Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908.”

15. It was contended that from a comparison of the two provisions, it is clear that the first part of Section 26 of the Amending Act uses the word ―to‖ instead of ―in relation to‖ and the expression ―in relation to‖ is used only in the second part, whereas under Section 85(2)(a) of the said Act, the expression ―in relation to‖ is used in both parts. A reference was made to the Supreme Court decision in Thyssen Stahlunion Gmbh v. Steel Authority of India Limited: 1999 (9) SCC 334. It was submitted that the meaning of the expression ―in relation to‖ was examined in the said decision in the context of Section 85(2)(a) by the Supreme Court. The Supreme Court examined the applicability of the provisions of the Arbitration Act, 1940 which had been repealed in relation to arbitration proceedings which had commenced prior to the enactment of the said Act (i.e., the 1996 Act). The conclusions arrived at by the Supreme Court were as under:-

22. For the reasons to follow, we hold:
1. The provisions of the old Act (Arbitration Act, 1940) shall apply in relation to arbitral proceedings which have commenced before the coming into force of the new Act (the Arbitration and Conciliation Act, 1996).
2. The phrase ―in relation to arbitral proceedings‖ cannot be given a narrow meaning to mean only pendency of the arbitration proceedings before the arbitrator. It would cover not only proceedings pending before the arbitrator but would also cover the proceedings before the court and any proceedings which are required to be taken under the old Act for the award becoming a decree under Section 171 thereof and also appeal arising thereunder.
3. In cases where arbitral proceedings have commenced before the coming into force of the new Act and are pending before the arbitrator, it is open to the parties to agree that the new Act be applicable to such arbitral proceedings and they can so agree even before the coming into force of the new Act.
4. The new Act would be applicable in relation to arbitral proceedings which commenced on or after the new Act comes into force.
5. Once the arbitral proceedings have commenced, it cannot be stated that the right to be governed by the old Act for enforcement of the award was an inchoate right. It was certainly a right accrued. It is not imperative that for right to accrue to have the award enforced under the old Act some legal proceedings for its enforcement must be pending under that Act at the time the new Act came into force.
6. If a narrow meaning of the phrase ―in relation to arbitral proceedings‖ is to be accepted, it is likely to create a great deal of confusion with regard to the matters where award is made under the old Act. Provisions for the conduct of arbitral proceedings are vastly different in both the old and the new Act. Challenge of award can be with reference to the conduct of arbitral proceedings. An interpretation which leads to unjust and inconvenient results cannot be accepted.

―17. Judgment in terms of award.--Where the court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the court shall, after the time for making an application to set aside the award has expired, or such application having been made, after refusing it, proceed to pronounce judgment according to the award, and upon the judgment so pronounced a decree shall follow, and no appeal shall lie from such decree except on the ground that it is in excess of, or not otherwise in accordance with the award.‖

7. A foreign award given after the commencement of the new Act can be enforced only under the new Act. There is no vested right to have the foreign award enforced under the Foreign Awards Act [Foreign Awards (Recognition and Enforcement) Act, 1961].‖ 

(underlining added)

16. The Supreme Court further examined the provisions of Section 85(2)(a) of the said Act in the following manner:-

―23. Section 85(2)(a) of the new Act is in two limbs: (1) provisions of the old Act shall apply in relation to arbitral proceedings which commenced before the new Act came into force unless otherwise agreed by the parties, and (2) the new Act shall apply in relation to arbitral proceedings which commenced on or after the new Act came into force. The first limb can further be bifurcated into two: (a) provisions of the old Act shall apply in relation to arbitral proceedings commenced before the new Act came into force, and (b) the old Act will not apply in such cases where the parties agree that it will not apply in relation to arbitral proceedings which commenced before the new Act came into force. The expression ―in relation to‖ is of the widest import as held by various decisions of this Court in Doypack Systems (P) Ltd.2, Mansukhlal Dhanraj Jain3, Dhanrajamal Gobindram4 and Navin Chemicals Mfg5. This expression ―in relation to‖ has to be given full effect to, particularly when read in conjunction with the words ―the provisions‖ of the old Act. That would mean that the old Act will apply to the whole gambit of arbitration culminating in the enforcement of the award. If it was not so, only the word ―to‖ could have sufficed and when the legislature has used the expression ―in relation to‖, a proper meaning has to be given.

This expression does not admit of restrictive meaning. The first 1988 (2) SCC 299 1995 (2) SCC 665 AIR 1961 SC 1285 1993 (4) SCC 320 limb of Section 85(2)(a) is not a limited saving clause. It saves not only the proceedings pending at the time of commencement of the new Act but also the provisions of the old Act for enforcement of the award under that Act. 

24. The contention that if it is accepted that the expression ―in relation to‖ arbitral proceedings would include proceedings for the enforcement of the award as well, the second limb of Section 85(2)(a) would become superfluous. We do not think that would be so. The second limb also takes into account the arbitration agreement entered into under the old Act when the arbitral proceedings commenced after the coming into force of the new Act. 

.......‖ xxxxx xxxxx xxxxx xxxxx xxxxx ― 

28. Section 85(2)(a) is the saving clause. It exempts the old Act from complete obliteration so far as pending arbitration proceedings are concerned. That would include saving of whole of the old Act up till the time of the enforcement of the award. This (sic Thus) Section 85(2)(a) prevents the accrued right under the old Act from being affected. Saving provision preserves the existing right accrued under the old Act. There is a presumption that the legislature does not intend to limit or take away vested rights unless the language clearly points to the contrary. It is correct that the new Act is a remedial statute and, therefore, Section 85(2)(a) calls for a strict construction, it being a repealing provision. But then as stated above where one interpretation would produce an unjust or an inconvenient result and another would not have those effects, there is then also a presumption in favour of the latter. 

29. Enforcement of the award, therefore, has to be examined on the touchstone of the proceedings held under the old Act. 

xxxxx xxxxx xxxxx xxxxx xxxxx 

32. Principles enunciated in the judgments show as to when a right accrues to a party under the repealed Act. It is not necessary that for the right to accrue legal proceedings must be pending when the new Act comes into force. To have the award enforced when arbitral proceedings commenced under the old Act under that very Act is certainly an accrued right. Consequences for the party against whom award is given after arbitral proceedings have been held under the old Act though given after the coming into force of the new Act, would be quite grave if it is debarred from challenging the award under the provisions of the old Act. Structure of both the Acts is different. When arbitral proceedings commenced under the old Act it would be in the mind of everybody, i.e., the arbitrators and the parties that the award given should not fall foul of Sections 30 and 32 of the old Act. Nobody at that time could have thought that Section 30 of the old Act could be substituted by Section 34 of the new Act. As a matter of fact appellant Thyssen in Civil Appeal No. 6036 of 1998 itself understood that the old Act would apply when it approached the High Court under Sections 14 and 17 of the old Act for making the award rule of the court. It was only later on that it changed the stand and now took the position that the new Act would apply and for that purpose filed an application for execution of the award. By that time limitation to set aside the award under the new Act had elapsed. The appellant itself led the respondent SAIL in believing that the old Act would apply. SAIL had filed objections to the award under Section 30 of the old Act after notice for filing of the award was received by it on the application filed by Thyssen under Sections 14 and 17 of the old Act. We have been informed that numerous such matters are pending all over the country where the award in similar circumstances is sought to be enforced or set aside under the provisions of the old Act. We, therefore, cannot adopt a construction which would lead to such anomalous situations where the party seeking to have the award set aside finds himself without any remedy. We are, therefore, of the opinion that it would be the provisions of the old Act that would apply to the enforcement of the award in the case of Civil Appeal No. 6036 of 1998. Any other construction on Section 85(2)(a) would only lead to confusion and hardship. This construction put by us is consistent with the wording of Section 85(2)(a) using the terms ―provision‖ and ―in relation to arbitral proceedings‖ which would mean that once the arbitral proceedings commenced under the old Act it would be the old Act which would apply for enforcing the award as well.‖ (underlining added)

17. It was contended on behalf of the respondents that a Division Bench of the Calcutta High Court in Tufan Chatterjee v. Rangan Dhar: AIR 2016 Cal 213 and the Madras High Court in New Tirupur Area Development Corporation Limited v. Hindustan Construction Company Limited: [Application No.7674/2015 in O.P. 931/2015] have held that since Section 26 of the Amending Act uses the expression ―to arbitral proceedings‖ instead of ―in relation to arbitral proceedings‖, the legislative intent was to limit its scope and, therefore, the said Section 26 could not be extended to include post-arbitral proceedings (including court proceedings). It was submitted that the crucial difference is in the words ―in relation to‖ in Section 85(2)(a) of the said Act which are missing from the first part of Section 26 of the Amending Act. It was submitted that the Supreme Court in the decision in Thirumalai (supra) was also relied upon by the Calcutta High Court and the Madras High Court in the aforesaid judgments. It was, therefore, submitted that since the first part of Section 26 of the Amending Act uses the phrase ―to arbitral proceedings‖ as distinct from the expression ―in relation to arbitral proceedings‖ used in Section 85(2)(a) of the said Act, it would, therefore, have a restrictive meaning.

18. It was also contended that the aid to Section 6 of the General Clauses Act ought not to be resorted to because of the use of the restrictive phrase in Section 26. This implies that the legislature deliberately and intentionally kept the post-arbitral proceedings outside the application of the first part of Section 26 of the Amending Act. It was also contended that the remedy available to a party under Section 34 has not been taken away by the Amending Act and there are only slight changes to Section 34. It was submitted that the only vested right was with regard to the challenge to an arbitral award which has remained intact. Section 36 relates to the enforcement of the award. Even under the unamended provisions, the party in whose favour the award was made was entitled for enforcement of the award after the expiry of the period mentioned in Section 34 or after the dismissal of a petition under Section 34. It was contended that the disability of the party in favour of whom the award was made in executing the award during the pendency of the petition under Section 34 under the unamended provision only provided an interim relief and the same cannot be said to be a vested or accrued substantive right. It was further contended that, in any event, the interim relief has not been completely taken away and only the stay of enforcement of an award has been made a subject matter of an order of the court in place of an automatic stay.

19. For all these reasons, it was contended by the learned counsel for the respondents that no interference with the impugned order was called for and the appeals ought to be dismissed.

20. In rejoinder, it was submitted by the learned counsel for the appellants that the decision of the Calcutta High Court in Tufan Chatterjee (supra) sought to bifurcate the words contained in Section 26 of the Amending Act inasmuch as it distinguished the terms ―to arbitration proceedings‖ and ―in relation to arbitration proceedings‖ to contend that the former means only proceedings before the arbitral tribunal, whereas the latter refers to all proceedings including court proceedings post the award. It was contended that if this interpretation was to be accepted, it would lead to serious contradictions, especially in the interplay between Sections 9 and 17, where the court proceedings (in relation to arbitral proceedings which commenced before the amendment) would be under Section 9 of the new regime, and the arbitral proceedings (which commenced before the amendment) would have to be under the old regime (including Section 17). It was, therefore, contended that it would certainly not be the intention of the Legislature to have the arbitral tribunal and the courts apply different standards in relation to the same proceedings.

21. Consequently, it was submitted that insofar as the petitions under Section 34 of the said Act, which have been filed in the present matters, are concerned, they ought to be governed by the unamended provisions.

22. Let us now analyse Section 26 of the Amending Act. It is comprised of two parts. The first part stipulates that nothing contained in the Amending Act shall apply to the arbitral proceedings commenced in accordance with the provisions of Section 21 of the principal Act before the commencement of the Amending Act (i.e., on 23.10.2015), unless, of course, the parties otherwise agree. The second part makes it clear that the Amending Act and, consequently, the amendments brought about by it in the said Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of the Amending Act. It is, therefore, clear that Section 26 bifurcates cases on the basis of the commencement of the arbitral proceedings being ‗prior' or ‗on or after' the date of commencement of the Amending Act. In other words, the date of commencement of the Amending Act, that is, 23.10.2015, is what separates the two parts of Section 26. Insofar as the second part is concerned, there is and can be no confusion inasmuch as the Amending Act and consequently, the amendments brought about by it in the said Act, would clearly apply in relation to arbitral proceedings which commence on or after the date of commencement of the Amending Act (i.e., 23.10.2015). In other words, in cases of any arbitral proceedings which commence on or after 23.10.2015, the amendments would apply to the entire gamut of such proceedings.

23. An issue has been raised (and, was the subject matter of debate before us) as to whether there was any difference in the expressions ―to the arbitral proceedings‖ and ―in relation to arbitral proceedings‖ appearing in the two parts of Section 26 of the Amending Act. It was contended on behalf of the respondents that the expression ―in relation to arbitral proceedings‖ was referable to the entire gamut of arbitration culminating in the enforcement of the award and that the expression related not only to proceedings before the arbitral tribunal, but also to the proceedings emanating therefrom before the court. This was contended on the basis of the Supreme Court decision in Thyssen Stahlunion (supra). It was also contended on the strength of an observation in the said decision that if it was not so, only the word ―to‖ could have sufficed. It may be recalled that in that decision, Section 85(2)(a) of the said Act had come up for interpretation. That provision also comprised of two parts. But, in both parts, the expression used was ―in relation to arbitral proceedings‖. In that context, the Supreme Court had observed that the expression ―in relation to‖ did not admit of a restrictive meaning and that the first limb of Section 85(2)(a) was not a limited saving clause as it saved not only the proceedings pending at the time of commencement of the Arbitration and Conciliation Act, 1996, but also the provisions of the Arbitration Act, 1940 for enforcement of the award under that Act (i.e., the 1940 Act). It was contended on behalf of the respondents that in Section 26 of the Amending Act, while the expression ―in relation to arbitral proceedings‖ is used in the second part, in the first part the expression employed is ―to the arbitral proceedings‖. It was, therefore, contended that the first part of Section 26 which saved the unamended provisions of the said Act only had reference to arbitral proceedings, i.e., proceedings before an arbitral tribunal and not to any other proceedings emanating from or related to such arbitral proceedings, including proceedings before court.

24. It is to be seen as to whether the two limbs of Section 26, if interpreted in the manner suggested by the respondents, exhaust all the categories of cases. To put it differently, does Section 26 of the Amending Act deal with all types of cases, which could fall for consideration under the said Act. It is clear that insofar as the second limb of Section 26 is concerned, it takes within its fold every type of situation, which may arise in relation to arbitral proceedings, including both proceedings before the arbitral tribunal and court proceedings in relation thereto or connected therewith. Therefore, insofar as the second limb is concerned, there is no dispute that for all arbitration proceedings commenced on or after 23.10.2015, the Amending Act would apply and, therefore, the amended provisions of the said Act would be applicable.

25. This leaves us to consider the first part of Section 26. This part saves the application of the unamended provisions of the said Act to arbitral proceedings.

26. Let us assume, for the time being, that the expression ―arbitral proceedings‖ covers only those proceedings which are pending before the arbitral tribunal and not to other proceedings which may be pending before court or are in the process of being instituted in court. If this interpretation were to be accepted, then it would be clear that those situations, where arbitral proceedings commenced prior to 23.10.2015, but were not pending before the arbitral tribunals, would have no reference either in the first part or the second part of Section 26 of the Amending Act.

27. To illustrate, all the arbitral proceedings, which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, can be classified into three categories. The first category being where the arbitral proceedings commenced prior to 23.10.2015 and were pending before an arbitral tribunal on 23.10.2015; the second category would be of those cases where arbitral proceedings commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 seeking the setting aside of the award was made after 23.10.2015; the third category would be comprised of those cases where the arbitral proceedings commenced prior to 23.10.2015 and not only the award was made prior to 23.10.2015, but the petition under Section 34 had also been instituted before court prior to 23.10.2015. The three categories can be graphically represented as follows:-

28. Given the three categories of cases, if the interpretation of the respondents is accepted, then the first part of Section 26 would only deal with the first category. In other words, there would be nothing in Section 26 of the Amending Act which pertained to the second and third categories of cases.

29. In such a situation, it would have to be considered, independent of Section 26 of the Amending Act, as to whether the amended provisions applied to the said second and third category of cases. In this regard, we may note the observations of the Supreme Court in Thyssen (supra) where, after, considering several earlier decisions, the Supreme Court observed in paragraph 32 (which we have already extracted above) that the principles enunciated in the judgments show as to when a right accrues to a party under a repealed Act. The Supreme Court observed that it is not necessary that for the right to accrue, legal proceedings must be pending when the new Act comes into force. Furthermore, and more importantly, the Supreme Court observed that to have the award enforced when arbitral proceedings commenced under the old Act under that very Act was certainly an accrued right. In other words, all the aspects of enforceability of an award entail an accrued right both in the person in whose favour the award is made and against whom the award is pronounced. It will also be noticed that the Supreme Court made it clear that for the right to accrue, there is no necessity that legal proceedings must be pending when the new Act comes into force. This exactly covers the situation as obtaining in the second category of cases, where the arbitral proceedings were commenced prior to 23.10.2015 and the award was also made prior to 23.10.2015, but the petition under Section 34 had not yet been filed. This is the same situation as in the present case. Thus, the pendency of any legal proceedings or otherwise would not come in the way of determining as to whether the right had accrued under the unamended provisions or not. We have already noted that the Supreme Court in Thyssen (supra) observed that the right to have the award enforced (which also comprises of the negative right of the award debtor to not have it enforced till his objections under Section 34 of the said Act are heard and decided) is certainly an accrued right. Given the fact that the amended Section 36 takes away the right of an automatic stay of enforcement of an award, it is clear that the amendment introduced in Section 36 by virtue of the Amending Act would definitely impinge upon the accrued right of the party against whom the award is given after the arbitral proceedings have been held under the unamended provisions. Since an accrued right is affected, unless a contrary intention appears in the amending statute, the amendments would have to be treated as prospective in operation. Prospective from the standpoint of commencement of the arbitral proceedings.

30. Now, if the argument of the respondents is to be accepted that the first limb of Section 26 applies only to arbitral proceedings in the sense of proceedings before arbitral tribunals and not to court proceedings, then, it is obvious that Section 26 is silent with regard to the second and third categories of cases to which we have already referred above. In other words, in respect of these categories, no contrary intention of retrospectivity is evinced upon a reading of Section 26 of the Amending Act. Therefore, even if we take the argument of the respondents to be correct, the result would still be the same and, that is, that in respect of all the arbitral proceedings commenced prior to 23.10.2015, the unamended provisions of the said Act would continue to operate till the enforcement of the award.

31. We may also notice that in case the argument of the respondents is to be accepted that where arbitral proceedings commenced prior to 23.10.2015, the unamended provisions would be saved only in respect of the proceedings before the arbitral tribunal and would not extend to court proceedings, the same would result in serious anomalies. This is so because the Amending Act has sought to bring about amendments in Section 9 as well as Section 17 of the said Act. While Section 9 pertains to interim measures which may be directed by the court prior, during arbitral proceedings or after the making of the award, Section 17 deals with the interim measures which may be ordered by an arbitral tribunal. If the interpretation of the respondents is to be accepted, then, in respect of arbitral proceedings commenced prior to 23.10.2015, the amended provisions would apply to proceedings under Section 9 of the said Act, but not to Section 17 thereof. This would result in a serious anomaly.

32. On the other hand, if the expression ―to the arbitral proceedings‖ used in the first limb of Section 26 is given the same expansive meaning as the expression ―in relation to arbitration proceedings‖ as appearing in the second limb of Section 26, then, the matter becomes very simple and does not result in any anomaly. All the arbitral proceedings (and here we mean the entire gamut, including the court proceedings in relation to proceedings before the arbitral tribunal), which commenced in accordance with the provisions of Section 21 of the said Act prior to 23.10.2015, would be governed, subject to an agreement between the parties to the contrary, by the unamended provisions and all those, in terms of the second part of Section 26, which commenced on or after 23.10.2015 would be governed by the amended provisions.

33. In view of the above analysis and discussion, we regret our inability to agree with the view taken by the Calcutta High Court in Tufan Chatterjee (supra). It must be reiterated that in the said Calcutta High Court decision, the second and third categories of cases mentioned above was not considered at all. Consequently, the arguments of the respondents based on the reasoning adopted in Tufan Chatterjee (supra) cannot be accepted.

34. The conclusions that we can draw from the above analysis and discussion are:-

1) Section 26 of the Amending Act, if a narrow view of the expression ―to the arbitral proceedings‖ is to be taken, is silent on those categories of cases where the arbitral proceedings commenced prior to 23.10.2015 and where even the award was made prior to 23.10.2015, but where either a petition under Section 34 was under contemplation or was already pending on 23.10.2015;

2) In such eventuality, the amended provisions pertaining to those categories would apply only if they were merely procedural and did not affect any accrued right;

3) In the facts of the present case, the amendment to Sections 34 and 36, which pertain to the enforceability of an award, certainly affect the accrued rights of the parties;

4) As a result, the petitions filed by the appellants under Section 34 of the said Act would have to be considered under the unamended provisions of the said Act and consequently, the appellants would be entitled to automatic stay of enforcement of the award till the disposal of the said petitions.

35. In sum, the impugned order, to the extent it imposes a condition on the appellants / petitioners to deposit a sum of Rs 2.7 crores, is set aside. There shall be no requirement of the petitioners depositing / paying a sum of Rs 2.7 crores or any other sum as the filing of the petitions under Section 34 themselves would amount to automatic stay under the unamended provisions of Sections 34 and 36 read together. The appeals are allowed to the aforesaid extent. There shall be no order as to costs.

Photocopying Copyrighted Material 'in the course of instruction' is Fair Use

Justice R.S. Endlaw
Delhi High Court

In a landmark judgment rendered in The Chancellor, Masters & Scholars of The University of Oxford & Ors. v. Rameshwari Photocopying Services & Ors., the Delhi High Court has examined the scope of the 'fair use' doctrine and has held that photocopying copyrighted material during the course of educational instruction would not amount to copyright infringement.

Appearing for Rameshwari Photocopy Services ("Rameshwari"), Mr. Saurabh Seth denied that any act of infringement of copyright had been committed by his client. It was further argued that the activities carried on by his client amount to fair use of the works within the meaning of Sections 52(1)(a) & (h) of the Copyright Act, 1957. It was further argued that Rameshwari had been granted licence with respect to a small shop within the campus of Delhi School of Economics ("DSE") to provide photocopy services to students and faculty at nominal rate and as per the terms of licence and under the said license, Rameshwari was required to provide 3000 photocopies per month to DSE, an institute of the University of Delhi, free of cost and to charge only the prescribed rate for the photocopy service meted out to others

Mr. Saurabh Seth further pointed out that the University recommends the syllabi for each academic year along with suggested reading materials of a wide variety of authors and which material is contained in different books of different publishers sold at a high price, often beyond the reach of the students. It was also argued that the syllabi of the University does not recommend the entire publication but only certain extracts from the same and as such the students would be reluctant to buy the entire publication just for reading a particular chapter/extract therein and cannot afford to buy 35 to 40 books, portions of which are prescribed in the syllabi and / or suggested for reading. It was pointed out that to ease the financial burden on students, majority of the titles prescribed in the syllabi are housed in the library of the University which provides such expensive books for reference of students; however owing to only limited copies of such books being available with the library, not enough to cater to the needs of all the students, the library allows the students to obtain copies of such books for their own reference and study. 

It was further pointed out that the services of Rameshwari are availed by the students and faculty to photocopy the relevant extracts from the books, articles and journals at the nominal / prescribed rate for use for educational purpose and reference only. Such course packs are used by teachers and students in the course of academic instructions and for research purposes. It was further argued that Rameshwari was xeroxing at the instructions of and on the terms imposed by the University and is not commercially exploiting the author's copyright but is giving copies to students at nominal rates of 40 paise per page to aid their education. It was further argued that even if the students were to bring the original work to get the same photocopied, Rameshwari would charge the same rate.

Mr. Gopal Subramanium (assisted by Mr. Saurabh Banerjee) and Mr. Neeraj Kishan Kaul (assisted by Swathi Sukumar) appeared for the University and intervenors respectively and supported the case of Rameshwari that there was no infringement of copyright and that the use of the material was protected by the fair use doctrine.

After examining the issue in details, Justice Rajiv Sahai Endlaw has dismissed the suit holding inter alia as under:

24. To be able to gauge the full import of Section 52 of the Copyright Act, I have examined the provisions of the said law from the beginning of the statute.

25. The Copyright Act was enacted ―to amend and consolidate‖ the law relating to copyright. Copyright forms part of the bouquet of intellectual property rights and I have wondered whether copyright is also a natural right or a common law right which vests in the author or composer or producer of the work and thus whether in the absence of anything to the contrary contained in the Copyright Act, the attributes of ownership, as with respect to other forms of property, would enure to copyright also. Mention may be made of K.T. Plantation Pvt. Ltd. Vs. State of Karnataka (2011) 9 SCC 1 where a Constitution Bench of the Supreme Court held that Article 300A of the Constitution proclaims that no person can be deprived of his property save by authority of law, meaning thereby that a person cannot be deprived of his property merely by an executive fiat, without any specific legal authority or without any support of law made by a competent legislature and that the expression 'property' in Article 300A is not confined to land alone but also includes intangibles like copyright and other intellectual property and embraces every possible interest recognised by law. 

26. Section 13 of the Act defines the works in which copyright subsists but makes the same subject to the provisions of that Section as well as other provisions of the Act. The same leads me to form an opinion that copyright, though may subsist under the natural law in any work, has been made subject to the statute and if the statute limits the works in which copyright subsists, there can be no natural copyright therein.

27. Section 14 of the Act gives the meaning of copyright as the exclusive right, again ―subject to the provisions‖ of the Act, to do or authorize the doing of the acts listed therein in respect of the work in which the copyright subsists. The same is again indicative of the author, composer or producer having only such rights which are prescribed thereunder and that too subject to the other provisions of the Act. In relation to literary works, with which we are concerned, one such right is the right to reproduce the work or any substantial part thereof. However if any other provision of the Act is to provide otherwise, the same will cease to be the copyright. Similarly,Section 2(m) defines ―infringing copy‖ as meaning in relation to literary works, a reproduction thereof, if made in contravention of the Act, meaning, if any provision of the Act permits any person to reproduce any work or substantial part thereof, such reproduction will not be infringing copy. 

28. The position becomes unequivocally clear from Section 16 which provides that no person shall be entitled to copyright or any similar right in any work otherwise than under and in accordance with the provisions of the Copyright Act. The same unequivocally prescribes that there is no copyright except as prescribed in the Act, converting copyright from a natural or common law right to a statutory right.

29. Section 51 prescribes that copyright is infringed inter alia when any person does anything exclusive right to do which has been conferred by the Act on the owner of copyright. It follows, if there is no exclusive right, there is no infringement. Section 52 lists the acts which do not constitute infringement. Thus, even if exclusive right to do something constitutes copyright, if it finds mention in Section 52, doing thereof will still not constitute infringement and the outcome thereof will not be infringing copy within the meaning of Section 2(m). Section 55 also, entitles the owner of copyright to remedies by way of injunction, damages, accounts or otherwise as are conferred by law for infringement of a right, only when copyright is infringed and except as otherwise provided by the Copyright Act. Thus unless there is infringement of copyright within the meaning of the Act, owner of copyright is not entitled to sue.

30. A Division Bench of this Court in Time Warner Entertainment Company, L.P. Vs. RPG Netcom (2007) 140 DLT 758 held that copyright cannot be claimed and suit for infringement of copyright cannot be maintained de-hors the Copyright Act and that the Common law rights to copyright were abrogated, earlier by Section 31 of the Copyright Act, 1911. It was held that a person is entitled to copyright only under the provisions of the Copyright Act and any other statutory enactment in force. Supreme Court also, in Entertainment Network (India) Ltd. supra held that copyright unlike trademark is a right created under the Act and that when a author claims a copyright, the right has to be determined with reference to the provisions of the Act. Recently, in Krishika Lulla Vs. Shyam Vithalrao Devkatta (2016) 2 SCC 521, copyright was held to be a statutory right requiring statutory conditions to be satisfied.

31. Copyright as a natural or common law right has thus been taken away by the Copyright Act.

32. I conclude, there can be no copyright in any author, composer or producer save as provided under the Copyright Act. Axiomatically if follows, unless the action of defendants No 1 and 2 amounts to infringement of copyright within the meaning of the Copyright Act, the plaintiffs or any other person in whom copyright vests cannot sue for infringement or damages or accounts, as have been claimed in the plaint.

33. I have next wondered, whether making of copies by the defendant no.2 University (for the time being I am not entering into the controversy whether making of copies by the defendant no.1 under the arrangement as pleaded with the defendant no.2 University makes any difference) of the books purchased by the defendant no.2 University and kept in its library and distributing the said copies to its students (I am again at this moment not entering into the controversy whether the charging by the defendant no.2 University makes any difference) amounts to defendant no.2 University doing any of the acts which vests exclusively in the owner of the copyright in the said books and to infringement of copyright.

34. It is not in dispute that the works in question fall in the category of original literary work.Section 14(a)(i) and (ii), in respect of such works, vests the exclusive right ―to reproduce the work in any material form including the storing of it in any medium by electronic means‖ and the right ―to issue copies of the work to the public not being copies already in circulation‖ in the owner of the copyright. I have wondered, whether ―to reproduce the work‖ would include making photocopies thereof as the defendant No.2 University is doing. The word ―reproduce‖ has not been defined in Section 2 of the Act though i) Section 2 (hh) defines ―duplicating equipment‖ as any mechanical contrivance or device used or intended to be used for making copies of any work; ii) Section 2(s) defines ―photograph‖ as including photo-lithograph and any work produced by any process analogous to photography; and, iii) Section 2(x) defines ―reprography‖ as making copies of a work by photo-copying or similar means. On the basis thereof, I conclude that the words in Section 14(a)(i) ―to reproduce the work‖ would include making photocopy of the work in contravention of the provisions of the Act. I have in Continental Telepower Industries Ltd. Vs. Union of India MANU/DE/1691/2009 held that a photocopy is certainly a copy. Long back, in British Oxygen Company Ltd. Vs. Liquid Air Ltd. 1925 Ch. 383 also it was held that making photographic copy of literary work is reproduction thereof. I thus conclude that the right to make photocopies is the exclusive right of the author or composer of the literary work and a copyright within the meaning of Section 14. Axiomatically, the making of photocopies by the defendant No.2 University will constitute infringement of copyright within the meaning of Section 51 and the photocopies so made constitute infringing copy within the meaning of Section 2(m) unless such act is listed under Section 52 as an act not constituting infringement.

35. It is noteworthy that Section 14(a)(i) constitutes right to reproduce literary work per se as copyright and Section 51(a)(i) constitutes such reproduction per se as infringement of copyright and Section 2(m) constitutes the copy so reproduced as infringing copy. Infringement is complete on reproduction of the work. To constitute infringement, it is not necessary that the person who has so reproduced the work, should put it to any use or should distribute or sell the same to others. However Section 14(a)(ii) also vests the exclusive right to issue copies of the work to thepublic not being copies already in circulation, in the owner of the copyright and constitutes the same as copy right. Thus the action of issuing copies of the work to public would also constitute infringement of copyright under Section 51. Neither Section 14(a)(ii) nor Section 51(a)(i) require such issuance of copies to be for consideration or to make profit. Issuance of copies even if without any charge thus constitutes infringement of copyright. The Explanation to Section 14however provides that for the purpose of that Section, ―a copy which has been sold once shall be deemed to be a copy already in circulation‖. Thus, the books in which the plaintiffs claim copyright, purchased by the defendant no.2 University, as per the said Explanation, are deemed to be a copy already in circulation within the meaning of Section 14(a)(ii) and the exclusive right to issue the same to the public does not vest in the owner of the copyright and does not constitute copyright and the defendant no.2 University would be entitled to issue the said books to the public. This is the principle of ‗exhaustion' that perhaps is the genesis of libraries, not only of Universities and other educational institutions but run and operated otherwise and commercially also, and of the business of resale of books.

36. I must record that the thought has indeed crossed my mind, whether the words ―to issue copies of the work to the public not being copies already in circulation‖ used in Section 14(a)(ii)entitles the purchaser of a copy of copyrighted work and which copy as per Explanation to Section 14 is a copy already in circulation, to make more copies of the said work for issuance thereof to the public as the defendant No.2 University is doing but have concluded that the words ―to issue copies of the work‖ cannot be read/interpreted as ―to make copies of the work‖ and which underSection 14(a)(i) is the exclusive right of the author and composer and that the purport of Section 14(a)(ii) is only to not vest in the owner of copyright any right to further issue to public a copy which he has already once issued. If the words ―to issue copies of the work‖ were to be read also as ―making copies of the work‖, the same would tantamount to the owner of copyright after having once sold a copy thereof, being left with no right to restrain the person who has purchased the copy from making further copies thereof and selling the same.

37. The defendant No.2 University thus, though entitled to issue the books, published by the plaintiffs and purchased by it and kept by the defendant No.2 University in its library, to whosoever is entitled to issuance of the said books from the library, per Section 14(a)(i) andSection 51(a)(i) would not be entitled to make photocopies of substantial part of the said book for distribution to the students and if does the same, would be committing infringement of the copyright therein.

38. Section 51 however besides vide clause (a)(i) thereof constituting the doing of acts exclusive right to do which under Section 14 vests with the owner of the copyright, an infringement, vide clause(a)(ii) and (b) thereof also constitutes, permitting any place to be used for communication of the work to the public where such communication constitutes infringement of copyright and sale/hire or otherwise dealing in infringing copies of the work, as infringement of copyright; however for the said actions to constitute infringement, the same have to be shown to be for profit or by way of trade. What emerges therefore is that while doing of something exclusive right to do which vests in the owner of the copyright constitutes infringement of copyright irrespective of whether there is any commercial element therein or not, facilitating infringement and dealing in infringing copies constitutes infringement only if done with commercial element.

39. That takes me to Section 52 which forms the pivot of the rival contentions. Section 52 lists acts, which even if infringement per Section 51 read with Section 14, have been statutorily declared to be not constituting infringement of copyright. But for Section 52 the acts listed thereunder would have constituted infringement of copyright.

40. Before proceeding to deal with the acts listed under Section 52 and on which arguments were addressed, I will take up first the question whether interpretation of Section 52 is to be by applying the rules of interpretation as applicable to a proviso or an exception, to Section 51.

41. Having considered the provisions of (i) Section 2(m) constituting reproduction of literary work as an infringing copy only if such reproduction or copy is made in contravention of provisions of the Act; (ii) Section 14 making the exclusive rights which flow from ownership of copyright subject to the provisions of the Act; (iii) Section 16 making ownership of copyright statutory; and, (iv) Section 51(a)(i) which by reference to Section 14, incorporates therein the condition of ―subject to provisions of this Act‖, I am of the view that a) the legislature having abrogated the natural or common law rights of authors and composers; and b) and having statutorily enacted what is copyright; and c) having made what is copyright also subject to other provisions of the Act; and d) having in successive provisions of the Statute prescribed ―when copyright infringed‖ and ―certain acts not to be infringement of copyright‖; and e) having vested the right to civil remedies only to situations when copyright is infringed, the rules of interpretation of Statutes as applicable to Proviso and Exception cannot be applied to Section 52of the Copyright Act. Once the acts listed in Section 52 are declared as not constituting infringement of copyright and the reproduction of work resulting from such acts as not constituting infringing copy, it follows that the exclusive right to do the acts mentioned in Section 52 has not been included by the legislature in the definition in Section 14; of copyright, once that is so, the doing of such act cannot be infringement under Section 51 and the question of taking the same out by way of proviso or exception does not arise. Supreme Court, in Nand Kishore Mehra Vs. Sushil Mehra (1995) 4 SCC 572, dealing with Sections 3(1) and 3(3) of the Benami Transactions (Prohibition) Act, 1988 which prohibits a person from entering into any benami transaction, Section 3(2) which permits a person to enter into a benami transaction of purchase of property in the name of his wife or unmarried daughter and Section 4 of the said Act which prohibits a person from enforcing rights in a property held benami, held that to hold that a person who is permitted to purchase a property benami in the name of his wife or unmarried daughter cannot enforce his rights in the property would amount to holding that the Statute which allows creation of rights by a benami transaction also prohibits enforcement of such rights, a contradiction which can never be attributed to a Statute. Similarly here, to hold that inspite of the legislature having declared the actions listed in Section 52 to be not amounting to infringement, the same have to be viewed putting on the blinkers of being infringement would amount to holding that the Copyright Act which allows actions listed in Section 52 to be done without the same constituting infringement and consequences thereof not constituting infrining copy, cannot be done to the extent permitted by the language of Section 52. I thus agree with the contention of the senior counsel for the defendant no.2 University that the rights of persons mentioned in Section 52 are to be interpreted following the same rules as the rights of a copyright owner and are not to be read narrowly or strictly or so as not to reduce the ambit of Section 51, as is the rule of interpretation of statutes in relation to provisos or exceptions. Thus, Sections 14 and51 on the one hand and Section 52 on the other hand are to be read as any two provisions of astatute. Reliance by defendants on Entertainment Network (India) Ltd. supra in this respect is apposite. It was held that the Copyright Act seeks to maintain a balance between the interest of the owner of copyright in protecting his works on the one hand and interest of the public to have access to the works, on the other.

42. The next question to be considered is whether the actions of the defendant no.2 University are to be tested on the anvil of Clauses (h),(i),(j) of Section 52(1) which deal with acts in relation to education or also on the anvil of Clause (a) of Section 52(1) which deals with an acts for purposes of private or personal use, criticism or review or reporting of current events, if in fair dealing with the work.

43. The various clauses under Section 52(1) deal with different factual situations. I am of the view that once the legislature has in Clauses (h), (i), (j) under Section 52(1) provided specifically for the field of education/instruction, the scope thereof cannot be expanded or restricted by applying the parameters of the omnibus or general Clause (a). It is a well known rule of construction that general provisions yield to special provisions. Supreme Court in J.K. Cotton Spinning & Weaving Mills Co. Ltd. Vs. State of Uttar Pradesh AIR 1961 SC 1170 held that this rule has not been arbitrarily made by lawyers and judges but springs from common understanding of men and women that when the same person gives two directions, one covering a large number of matters in general and another to only some of them, his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect. This rule was recently reiterated in Commercial Tax Officer Vs. Binani Cements Ltd. (2014) 8 SCC 319. I thus hold Section 52(1)(a) to be having no applicability to the impugned action. Thus the extent of Section 52(1)(h), (i), (j) or whichever one is found applicable to specific situation with which we are concerned, cannot be widened or restricted by applying the parameters of Section 52(1)(a).

44. Section 52(1)(h) does not constitute as infringement the publication in a collection, mainly composed of non-copyrighted matter, bona fide intended for instructional use, of short passages from copyrighted work provided that not more than two such passages from the copyrighted work are so included.

45. However for Section 52(1)(h) to apply, there has to be firstly a ―publication‖ and secondly ―mainly composed of non-copyrighted matter‖. Though the course packs with which we are concerned in this suit may qualify as a collection within the meaning of Section 52(1)(h) but the said collection according to the plaintiffs also is entirely of copyrighted matter. For Section 52(1)(h) to apply the said collection has to be mainly of non- copyrighted matter. For this reason alone, in my opinion, the question of applicability of Section 52(1)(h) to the subject factual situation does not arise.

46. I have also wondered, whether the action of the defendant no.2 University impugned in the present suit i.e. of making photocopies of different copyrighted works and supplying the said photocopies to the students amounts to ―publication‖ within the meaning of Section 52(1)(h). 

47. The meaning of ―publication given in Section 3 of the Copyright Act for the purposes of the said Act is, making a work available to the public by issue of copies or by communicating the work to the public. Significantly Section 3 is not qualified with the words ―except where the context otherwise requires‖. On first impression, making of copies of copyrighted work and making the same available to the students would amount to publication within the meaning of Section 3 of the Act. Though the senior counsel for the defendant no.2 University has argued that the students cannot be construed as ―public‖ but neither has any reason therefor been cited nor am I able to find any. In my opinion students would not cease to be ―public‖. 

48. However strangely enough Section 14 of the Act while prescribing the meaning of copyright as the exclusive right to do the acts which are listed thereunder does not use the word ―publication‖, though in relation to literary works, Clause (a)(ii) thereunder vests in the owner of the copyright exclusive right to issue copies of the work to the public and which according to me would fall within ‗publication' within the meaning of Section 3 of the Act. The same leads me to infer that the word ―publication‖ in Section 3 refers to an act of preparation and issuing of a book, journal or piece of music for public sale as the plaintiffs are doing and does not refer to the act of making photocopies of a already published work and issuing the same. The meaning ascribed in Section 3 to ‗publication' becomes clear on reading thereof with Section 4 titled ―When work not deemed to be published or performed in public‖ and Section 5 titled ―When work deemed to be first published in India‖ and is found to be in the context of being made available to the public for the first time. When photocopies of an already published work are made, the same does not amount to making the work available to the public for the first time. Even otherwise it is a settled principle of interpretation that the definition even if given in a Statute to any word may not apply to the word used in another provision of the Statute if the context does not so permit. Supreme Court in Commissioner of Sales Tax Vs. Union Medical Agency (1981) 1 SCC 51 held that it is well settled principle that when a word or phrase has been defined in the interpretation clause, prima facie that definition governs whenever that word or phrase is used in the body of the statute; but where the context makes the definition clause inapplicable, a defined word when used in the body of the statute may have to be given a meaning different from that contained in the interpretation clause; all definitions given in an interpretation clause are therefore normally enacted subject to the usual qualification -"unless there is anything repugnant in the subject matter or context", or "unless the context otherwise requires"; even in the absence of an express qualification to that effect, such a qualification is always implied.

49. Once Section 52(1)(h) is held to be not applicable, the contentions of the counsel for the plaintiffs, of the actions of the defendant no.2 University impugned in this suit constituting infringement owing to photocopying by the defendant no.2 University being of more than two short passages of each of the copyrighted work, also falls.

50. It is nobody's argument that Section 52(1)(j), though also pertaining to education and making performance, in the course of activities of an educational institution, of a literary, dramatic or musical work by the staff and students of the institution, if the audience is limited to such staff and students, the parents / guardians of students and persons connected with activities of institution as not constituting infringement of copyright applies to the factual situation subject matter of adjudication. 

51. The adjudication thus has to be only on the anvil of Section 52(1)(i) which constitutes, the reproduction of any work i) by a teacher or a pupil in the course of instruction; or ii) as part of the questions to be answered in an exam; or ii) in answers to such questions, not to be infringement of copyright .

52. The act of making of photocopies by the defendant no.2 University, as I have held hereinabove, is reproduction of copyrighted work by the defendant no.2 University.

53. However for the action of reproduction of such work by the defendant no.2 University to, under Section 52(1)(i), not constitute infringement of copyright in the said works, the same has to be ―by a teacher or a pupil in the course of instruction‖.

54. Though not addressed by either counsel but I have also considered whether the defendant no.2 University which is reproducing the work by making photocopies thereof would fall within the meaning of the word ―teacher‖ in Section 52(1)(i). Significantly Section 52(1)(j) which prescribes the action of performance of a literary, dramatic or musical work by the staff and students as not constituting infringement uses the words ‗educational institution' and which are conspicuously missing in Section 52(1)(i). The questions arise a) whether owing to the difference in language between Sections 52(1)(i) and 52(1)(j) with Section 52(1)(i) using the words ―teacher‖ and ―pupil‖ and Section 52(1)(j) using the words ―staff‖ and ―students‖ of ―educational institution‖ it has to be held that Section 52(1)(i) is not applicable to defendant no.2 University as an educational institution; or (b) whether the scope of Section 52(1)(i) is restricted to the actions of an individual teacher and an individual pupil or extends to action of the institution and its students.

55. On consideration, I am of the view that the scope and ambit of Section 52(1)(i) cannot be so restricted. The settled principle of interpretation of statutes is that the legislature is to be deemed to have used the language in the context of the prevailing laws and societal situations to which the legislation is intended. Education in the country though at one time pursued in Guru-Shishya parampara (Teacher - disciple tradition) has for long now been institutionalised, both at school and post - school level, with imparting of education by a teacher individually having no recognition. There is no reason to interpret Section 52(1)(i) as providing for an individual teacher and an individual pupil and which, neither at the time of inclusion thereof in the statute nor now exists in the society. Supreme Court, in S.P. Gupta Vs. President of India 1981 Supp (1) SCC 87 held that interpretation of every statutory provision must keep pace with the changing concepts and it must, to the extent to which its language permits, or rather does not prohibit, suffer adjustments so as to accord with the requirements of fast growing society. Similarly in The State of Maharashtra Vs. Dr. Praful B. Desai (2003) 4 SCC 601 it was held that in construing an ongoing Act, the interpreter is to presume that Parliament intended the Act to be applied at any future time in such a way as to give effect to the original intention. The phrase ‗purposes of teaching, research or scholarship' vide Section 32(6) Explanation (d), though for the purpose of that Section only, has been defined as including ―purposes of instructional activity at all levels in educational institutions, including Schools, Colleges, Universities and tutorial institutions‖ and ―purposes of all other types of organized educational activity‖. I have no reason to hold that the legislature intended to exclude teacher and pupil in an educational institution as defendant no.2 University is, from ambit thereof. Thus, merely because imparting of education by teachers today is as part of an institution as the defendant no.2 University and it is the defendant no.2 University which on behalf of its teachers is reproducing any copyrighted work by making photocopies thereof, would not mean that Section 52(1)(i) would not be applicable. The counsel for the plaintiffs also, to be fair to him, has not contended so.

56. I may at this stage deal with another contention i.e. of substitution the words ―intended for the use of educational institutions‖ in Section 52(1)(g) as it stood prior to the, amendment of the year 2012 of the Copyright Act with the words ―intended for instructional use‖ in equivalentSection 52(1)(h) post amendment. The only effect of such substitution in my view is to expand/widen the scope thereof. ‗Instruction' is not confined to Educational Institutions or Establishments. The word ‗instruction' embraces any form of instruction wheresoever and not necessarily in educational institutions. It has been so authored in Para 21.84 of the Modern Law of Copyright & Designs Fourth Edition by Laddie, Prescott and Vitoria, also. However as distinct therefrom Section 52(1)(h) of pre 2012 amendment corresponding to Section 52(1)(i) of post amendment used the words ‗in the course of instruction' ‗by a teacher or a pupil' only. Thus while publication in a collection mainly composed of non-copyright work of two short passages of copyrighted work was earlier permitted only if intended for use of educational institutions, it is now permitted for any instructional use, not necessarily in educational institutions.

57. The use of the word ‗publication' in Section 52(1)(h) as distinct from the word ‗reproduction' in Section 52(1)(i) further brings out the difference between the two words. While the word ‗publication' used in Section 52(1)(h) connotes making available to the public ‗for the first time' or by way of ‗further editions' or ‗re-print' i.e. the activity in which plaintiffs are involved, the word ‗reproduction' used in Section 52(1)(i) entails ‗copying' for limited use i.e. for an individual or for a class of students being taught together by a teacher.

58. What is however contended is that the act of reproduction of copyrighted work permitted under Section 52(1)(i) has to be ―in the course of instruction‖ i.e. in the course of teachers of the defendant no.2 University lecturing the pupils and does not cover, the defendant no.2 University in the syllabus prescribed by it prescribing portions of the copyrighted work as suggested reading, making photocopies thereof and making the same available to the pupils i.e. the students. It is contended that the use of the word ―instruction‖ has to be limited to imparting of instructions in the classrooms or in the tutorials and during which the teachers can teach by doing in relation to copyrighted work actions which otherwise are the exclusive right of the owner of the copyright.

59. The word ―instruction‖ used in Section 52(1)(i) as also in Section 52(1)(h) (though not applicable) is not defined in the Act, though the word ―lecture‖ has been defined in Section 2(n)as including address, speech and sermon. The meaning assigned by the counsel for the plaintiffs to the word ―instruction‖ is the same as inclusive definition of lecture. Had the intention of the legislature while incorporating Section 52(1)(i) been to constitute reproduction of any work by a teacher or a pupil in the course of lecture, the legislature would have in Section 52(1)(i) used the word ―lecture‖ which has been defined in the Act. The word ―instruction‖ thus has to necessarily mean something other than lecture.

60. The word ‗instruction', as commonly understood and defined in dictionaries, means ‗something that someone tells you to do' or ‗a direction or order' or ‗detailed information about how something should be done or operated' or ‗the action or process of teaching'. Thus the word ‗instruction' in the context of a teacher would mean something which a teacher tells the student to do in the course of teaching or detailed information which a teacher gives to a student or pupil to acquire knowledge of what the student or pupil has approached the teacher to learn. A Division Bench of the High Court of Karnataka in B.K. Raghu Vs. The Karnataka Secondary Education Examination Board ILR 2009 Karnataka 206 also equated education to instruction or training by which people, (generally young), learn to develop and use their mental, moral and physical powers. It was held that 'formal education' is instruction given in schools and colleges--In this type of education, the people in charge of a school or college decide what to teach and learners then study those things under the direction of teachers. A Division Bench of the High Court of Bombay in Bombay Municipal Corporation Vs. Ramachandra Laxman Belosay AIR 1960 Bom 58 held that the words ―educational objects‖ in Section 63(b) of the Bombay Municipal Corporation Act, 1888 and the word ―instruction‖ used in clause (k) are words of very wide import. Education was held as meaning ―totality of information and qualities acquired through instruction and training which further the development of an individual physically, mentally and bodily‖. The word ―instruction‖ was held to mean, to furnish knowledge or information, to train in knowledge or learning, to teach, to educate.

61. Moreover, the use of the word ―instruction‖ preceded with the words ―in the course of‖ would mean in the course of instruction being imparted and received.

62. The crucial question for adjudication is, when does the imparting of instruction begin and when does it end. Whether in the classroom or tutorials only, as suggested by the counsel for the plaintiff or it begins prior to the classroom and ends much after the classroom interface between the teacher and pupil has ended, as contended by the counsels for the defendants. 

63. That takes me to the meaning of the phrase ―in the course of‖. Such words/phrase are found to have been often used in legislations (i) in relation to trade and commerce viz. ―in the course of trade and commerce‖ or ―in course of manufacture‖ or ―in the course of import or export‖, (ii) in legislations relating to employment viz. ― in the course of employment‖, and (iii) in legislations relating to taxation viz. ―in the course of the year‖, and my research shows, have been interpreted widely, as including within their ambit actions not just constituting ‗trade and commerce' or ‗employment' or ‗year' but also what are preceding and following the actual acts. 

64. Supreme court, in State of Travancore-Cochin Vs. Shanmugha Vilas Cashewnut Factory Quilon AIR 1953 SC 333, while construing the words ―in the course of the import of goods into, or export of the goods out of, the territory of India‖ used in Article 286(1)(b) of the Constitution of India held that though the words ―in the course of‖ are not to be read as synonymous with the words ―for the purpose of‖ but still the purchase made by the exporter to implement his agreement for sale with foreign buyer is to be regarded as having taken place in the course of export because the purchase by the exporter is an activity so closely integrated with the act of export as to constitute a part of the export process itself and as having taken place ―in the course of‖ the export. It was also held that the earlier sale or purchase were remote and not be regarded as integral part of the process of the export in the same sense as the last purchase by the exporter. It was held that the exports can be occasioned only if the exporters have the goods to export; the exporters are not necessarily the producers or manufacturers and in great many cases they have to procure the goods to implement the foreign orders; the overseas orders in such cases immediately necessitate the purchase of the goods and eventually occasion the export; the three activities were held to be so intimately and closely connected, like cause and effect, with the actual export that they may well be regarded as integral parts of the process of export itself. It was yet further held that one cannot overlook or ignore these well known preliminary but essential activities of the export merchants which necessarily precede and lead up to and indeed occasion or eventually make possible the ultimate physical movement of the goods and to hold that these purchases are independent local purchases totally distinct from the export trade will be to unduly narrow down the wide meaning of the flexible phrase ―in the course of‖.

65. It would thus be seen that for construing the phrase ―in the course of‖, the test of ―an integral part of continuous flow‖ and of ―commercial sense‖ was evolved. I must however mention that by the Constitution Sixth Amendment Act, 1956, Parliament was given power to formulate principles for determining when a sale or purchase of goods takes place. Pursuant thereto, a Constitution Bench of the Supreme Court in Md. Serajuddin Vs. The State of Orissa (1975) 2 SCC 47 though also held that the expression ―in the course of‖ implies ―not only a period of time during which the movement is in progress but postulates a connected relation‖, but on interpretation of Section 5 of the Central Sales Tax Act, 1956 held the sale to the exporter to be not exempt from sales tax under Section 5 of the Central Sales Tax Act, 1956. It would thus be seen that the ratio of Shanmugha Vilas Cashewnut Factory Quilon supra remains unaffected. 

66. In Mackinnon Machenzie and Co. (P) Ltd. Vs. Ibrahim Mahmmed Issak (1969) 2 SCC 607, Supreme Court while construing the words ―in the course of the employment‖ in Section 3 of the Workmen's Compensation Act, 1923 held that the words ―in the course of employment‖ mean ―in the course of the work which the workman is employed to do and which is incidental to it‖. It was further held that the words ―arising out of employment‖ are understood to mean that ―during the course of the employment, injury has resulted from some risk incidental to the duties of the service, which, unless engaged in the duty owing to the master, it is reasonable to believe the workman would not otherwise have suffered‖. It was yet further held that there must be a causal relationship between the accident and the employment.

67. It would thus be seen that the test of ―incidental‖, ―causal relationship‖ and ―otherwise would not have occasioned‖ was evolved to determine what is ―in the course of‖.

68. Again, in Regional Director, E.S.I. Corporation Vs. Francis De Costa (1996) 6 SCC 1, in the context of the words ―in the course of his employment‖ in Section 2(8) of the Employees' State Insurance Act, 1948, the dictionary meaning of ―in the course of‖ was explained as ―during (in the course of time, as time goes by), while doing‖.

69. In Commissioner of Income Tax, New Delhi Vs. M/s. East West Import and Export (P) Ltd. (1989) 1 SCC 760, in the context of the expression ―in the course of such previous year‖ in Explanation to Section 23A of the Income Tax Act, 1922 it was held that the word ―course‖ ordinarily conveys the meaning of a continuous progress from one point to the next in time and space and conveys the idea of a period of time, duration and not a fixed point of time. The words ―in the course of such previous year‖ were thus held to refer to the period commencing with the beginning of the previous year and terminating with the end of the previous year. 

70. A Five Judges Bench of the High Court of Orissa in Registrar of the Orissa High Court Vs. Baradakanta Misra AIR 1973 Ori 244 in the context of the words ―due course of justice‖ in Section 13 of the Contempt of Courts Act, 1971 held that one of the meanings of the word ―course‖ is ―the path in which anything moves‖. The words ―course of justice‖ were therefore held to mean the path in which justice moves. It would thus be seen that the test of ―the path in which anything moves‖ was applied to the interpretation of the words ―in the course of‖;

71. The phrase/words ―in the course of‖ are thus found to have a definite connotation and meaning and it has to follow that when the legislature used this phrase/words, it intended them to have the same meaning. The rule of construction approved by the Supreme Court in Banarsi Devi Vs. Income Tax Officer AIR 1964 SC 1742, is that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or a same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has previously been assigned to it. Similarly in F.S. Gandhi Vs. Commissioner of Wealth Tax (1990) 3 SCC 624 it was held that where the Parliament has repeated the same language it must be assumed that the Parliament was aware of construction placed by the courts on those words and in repeating those words Parliament must be taken to have used the words to bear the meaning which has been put upon them by the courts. 

72. Applying the tests as aforesaid laid down by the Courts of (i) integral part of continuous flow; (ii) connected relation; (iii) incidental; (iv) causal relationship; (v) during (in the course of time, as time goes by); (vi) while doing; (vii) continuous progress from one point to the next in time and space; and, (viii) in the path in which anything moves, it has to be held that the words ―in the course of instruction‖ within the meaning of Section 52(1)(i) supra would include reproduction of any work while the process of imparting instruction by the teacher and receiving instruction by the pupil continues i.e. during the entire academic session for which the pupil is under the tutelage of the teacher and that imparting and receiving of instruction is not limited to personal interface between teacher and pupil but is a process commencing from the teacher readying herself/himself for imparting instruction, setting syllabus, prescribing text books, readings and ensuring, whether by interface in classroom/tutorials or otherwise by holding tests from time to time or clarifying doubts of students, that the pupil stands instructed in what he/she has approached the teacher to learn. Similarly the words ―in the course of instruction‖, even if the word ―instruction‖ have to be given the same meaning as ‗lecture', have to include within their ambit the prescription of syllabus the preparation of which both the teacher and the pupil are required to do before the lecture and the studies which the pupils are to do post lecture and so that the teachers can reproduce the work as part of the question and the pupils can answer the questions by reproducing the work, in an examination. Resultantly, reproduction of any copyrighted work by the teacher for the purpose of imparting instruction to the pupil asprescribed in the syllabus during the academic year would be within the meaning of Section 52 (1)(i) of the Act.

73. The matter can be looked at from another angle as well. Though I have held Section 52(1)(a)to be not applicable to the action of the defendant no.2 University of making photocopies of copyrighted works but the issuance by the defendant no.2 University of the books purchased by it and kept in its library to the students and reproduction thereof by the students for the purposes of their private or personal use, whether by way of photocopying or by way of copying the same by way of hand would indeed make the action of the student a fair dealing therewith and not constitute infringement of copyright. The counsel for the plaintiffs also on enquiry did not argue so. I have wondered that if the action of each of the students of having the book issued from the library of defendant No.2 University and copying pages thereof, whether by hand or by photocopy, is not infringement, whether the action of the defendant no.2 University impugned in this suit, guided by the reason of limited number of each book available in its library, the limited number of days of the academic session, large number of students requiring the said book, the fear of the costly precious books being damaged on being subjected to repeated photocopying, can be said to be infringement; particularly when the result/effect of both actions is the same.

74. The answer, according to me, has to be in the negative. 

75. It cannot be lost sight of that Section 63 of the Copyright Act constitutes infringement of copyright an offence punishable with imprisonment for a term not less than six months and extendable to three years ―and‖ with fine. When an action, if onerously done is not an offence, it cannot become an offence when, owing to advancement in technology doing thereof has been simplified. That is what has happened in the present case. In the times when I was studying law, the facility available of photocopying was limited, time consuming and costly. The students then, used to take turns to sit in the library and copy by hand pages after pages of chapters in the books suggested for reading and subsequently either make carbon copies thereof or having the same photocopied. The photocopying machines then in vogue did not permit photocopying of voluminous books without dismembering the same.

76. However with the advancement of technology the voluminous books also can be photocopied and at a very low cost. Thus the students are now not required to spend day after day sitting in the library and copying pages after pages of the relevant chapter of the syllabus books. When the effect of the action is the same, the difference in the mode of action cannot make a difference so as to make one an offence. 

77. The Court of Claims of United States as far back as in The Williams & Wilkins Company Vs. The United States 487 F.2d 1345 (Ct.Cl. 1973) was concerned with an action for infringement of copyright by a medical publisher against the Department of Health, Education and Welfare through the National Institutes of Health and the National Library of Medicine. The National Library of Medicine was alleged to have infringed the copyright by making photocopies of the articles published in the medical journals and distributing the same amongst students, physicians and scientists engaged in medical research. It was held (i) that the photocopying process did not even amount to printing or reprinting in the dictionary sense; (ii) if the requester himself made a photocopy of the article for his own use on a machine made available by the library, he might conceivably be "copying" but he would not be "printing" or "reprinting" ; (iii) the library is in the same position when responding to the demands of individual researchers acting separately; (iv) there is no "publication" by the library, a concept which invokes general distribution, or at least a supplying of the material to a fairly large group; (v) it is common for courts to be given photocopies of recent decisions with the publishing company's headnotes and arrangement and sometimes its annotations; (vi) it cannot be believed that a Judge who makes and gives to a colleague a photocopy of a law review article, in one of the smaller or less available journals, which bears directly on a problem both Judges are then considering in a case before them, is infringing the copyright; (vii) library was not attempting to profit or gain financially by the photocopying; (viii) the medical researchers who had asked the library for the photocopies and the scientific researchers and practitioners who need the articles for personal use in their scientific work and have no purpose to re-duplicate them for sale or other general distribution; (ix) the copied articles were scientific studies useful to the requesters in their work; (x) on both sides - library and requester - scientific progress untainted by any commercial gain from the reproduction was the hallmark of the whole enterprise of duplication ; (xi) the act was to gain easier access to the material for study and research; (xii) care had been taken not to have excessive copying from one issue or one volume of the periodical; (xiii) the recipients were not using the library's photocopying process to sell the copies or distribute them broadly; (xiv) thelibrary was responding only to requests from its own personnel and the entire photo-duplication system is strictly "in-house" - in the same way that a court's library may supply a Judge of that court with a copy of a law journal article or a reported decision; (xv) medical science would be seriously hurt if such library photocopying were stopped; (xvi) without such photocopying constituting infringement, the libraries could not be compelled to take licence from the publisher; and, (xvii) photocopying falls within fair use. It was accordingly concluded that there was no infringement of copyright. It was further held that ―use is not the same as infringement and use short of infringement is to be encouraged‖. This decision of the Court of Claims was subsequently affirmed by the US Supreme Court in Williams & Wilkins Company Vs. US 420 U.S. 376. 

78. I may also mention another advancement. Today, nearly all students of the defendant no.2 University would be carrying cell phones and most of the cell phones have a camera inbuilt which enables a student to, instead of taking notes from the books in the library, click photographs of each page of the portions of the book required to be studied by him and to thereafter by connecting the phone to the printer take print of the said photographs or to read directly from the cell phone or by connecting the same to a larger screen. The same would again qualify as fair use and which cannot be stopped. 

79. The German Federal Supreme Court in Re. the Supply of Photocopies of Newspaper Articles by Public Library [2000] E.C.C. 237 held that in a modern technologically highly developed nation like Germany, an extensive fast functioning and economic information exchange was vital; that is why the libraries were given the freedom to operate and the reproduction rights of authors were restricted in favour of freedom of information; that it was sufficient to escape liability for copyright infringement if the customer of the library could claim the benefit of the exemption which allowed the copying for personal use, of articles published in a periodical; whether or not the library charges for its service is immaterial; there may be an act of ‗circulation' where copies are offered which had not yet been made at the time of the ‗circulation' but not when copies are made; the same does not constitute commercialisation of copies of protected works.
80. Copyright, specially in literary works, is thus not an inevitable, divine, or natural right that confers on authors the absolute ownership of their creations. It is designed rather to stimulate activity and progress in the arts for the intellectual enrichment of the public. Copyright is intended to increase and not to impede the harvest of knowledge. It is intended to motivate the creative activity of authors and inventors in order to benefit the public. For this reason only,Section 14(a)(ii) as aforesaid, applies the principle of ‗exhaustion' to literary works and which, this court in Warner Bros. Entertainment Inc. Vs. Mr. Santosh V.G. MANU/DE/0406/2009 has held, to be not applicable to copyright in an artistic work or in a sound recording or in a cinematographic film. Once it is found that the doctrine of exhaustion applies to literary work as the works with which we are concerned are, it has but to be held that it is permissible for the defendant No.2 University to on purchasing book(s) and stocking the same in its library, issue the same to different students each day or even several times in a day. It is not the case of the plaintiffs that the said students once have so got the books issued would not be entitled to, instead of laboriously copying the contents of the book or taking notes therefrom, photocopy the relevant pages thereof, so that they do not need the book again. 

81. I thus conclude that the action of the defendant no.2 University of making a master photocopy of the relevant portions (prescribed in syllabus) of the books of the plaintiffs purchased by the defendant no.2 University and kept in its library and making further photocopies out of the said master copy and distributing the same to the students does not constitute infringement of copyright in the said books under the Copyright Act. 

82. The next question is, whether the action of the defendant no.2 University of supplying the master copy to the defendant no.1, granting licence to the defendant no.1 to install photocopiers in the premises of the defendant no.2 University, allowing the defendant no.1 to supply photocopies made of the said master copy to the students, permitting the defendant no.1 to charge therefor and also requiring the defendant no.1 to photocopy up to 3000 pages per month free of cost for the defendant no.2 University and whether the action of the defendant no.1 of preparation of such course packs and supplying the same to the students for charge, constitutes ‗publication' within the meaning of Section 52(1)(h) or would tantamount to infringement by the defendant no.1 or the defendant no.2 University of the copyright of in the said books.

83. In my opinion, it would not.

84. What the defendant no.2 University is doing is not different from what is being done in the Bar Association library in the premises of this Court. With the advent of photocopying, the advocates of this Court, instead of carrying books from their residences / offices to this Court for citing judgments therefrom during the course of arguments and instead of giving in advance the list of such books to the Restorer of this Court and the Restorer of this Court also taking out the court's copies of the same books for the Judges to read, and all of which was cumbersome and time consuming, started having the photocopies of the relevant judgments made from the books in the Bar Association Library of this Court. Initially the said photocopying was got done by having the book issued from the library and carrying the same to the photocopier who had, for the convenience of the advocates, been granted a licence to operate from the premises of this Court. Subsequently, for expediency and to avoid the books being taken out of the library, the Bar Association library itself allowed the photocopier to install his machine within the library premises and any advocate could get the photocopy done by having the relevant judgment photocopied within the Bar Association library by paying the cost of photocopy as is fixed by the Bar Association.

85. The defendant no.2 University also could have possibly devised the same arrangement as has been followed in the Bar Association library of this Court and allowed the defendant no.1 to install its photocopying machine within the defendant no.2 University's library for the facility of the students. However for whatsoever reason the respondent no.2 University has deemed fit, it is continuing with the practice as was earlier prevalent in this Court.

86. In my view, there is no difference in the two situations i.e. whether the photocopying machine is installed within the library or is installed outside the library. In my view it also does not make any difference whether the respondent no.2 University itself purchases the photocopy machine and / or allows the students to photocopy themselves or employs a person for doing photocopy. In this respect, I may again note that in our country, with abundance of labour force, the acts such as of photocopying which are done by those desirous thereof themselves in other countries are done by a person employed therefor. In countries with not so much labour force, photocopiers are found to have been installed in libraries for the benefit of the patrons of the library to themselves photocopy whatsoever passages of the publications in the library they are desirous of photocopying for their personal use. Once such a action is held to be not offending any provisions of the Copyright Act, merely because the photocopying is done not by the person desirous thereof himself but with the assistance of another human being, would not make the act offending. It matters not whether such person is an employee of the defendant no.2 University or the defendant no.2 University avails the services of a contractor. The position of the defendant no.1 in the present case is found to be that of a contractor to whom the defendant no.2 University has outsourced its work of providing photocopying service for its students. For this reason, it matters not whether the photocopying machine is allowed by the defendant no.2 University to be kept within the library or at some other place outside the library.

87. It is not the case of the plaintiffs that the defendant no.2 University has permitted the defendant no.1 to or that the defendant no.1 is photocopying the entire books, binding the same, offering or displaying the same for sale to whosoever may be desirous of purchasing the same. The case of the plaintiffs before us is only of preparation of course packs i.e. compilations of photocopied portions of different books prescribed by the defendant no.2 University as suggested reading in its syllabus. That, in my view, by no stretch of imagination, can make the defendant no.1 as competitor of the plaintiffs. Imparting of education by the defendant no.2 University is heavily subsidized with the students still being charged tuition fee only of Rs.400 to 1,200/- per month. The students can never be expected to buy all the books, different portions whereof are prescribed as suggested reading and can never be said to be the potential customers of the plaintiffs. If the facility of photocopying were to be not available, they would instead of sitting in the comforts of their respective homes and reading from the photocopies would be spending long hours in the library and making notes thereof. When modern technology is available for comfort, it would be unfair to say that the students should not avail thereof and continue to study as in ancient era. No law can be interpreted so as to result in any regression of the evolvement of the human being for the better. 

88. Just like the cost to the respondent no.2 University of employing a photocopier or a contractor for photocopying would have to be necessarily built in the cost of photocopy, so also the cost incurred by the defendant no.1 in employing manpower and towards electricity would be built in cost of photocopying. My enquiries reveal that the photocopier granted licence in this Court premises is also presently charging 75 paise per page. Comparing the same with the rate which the respondent no.2 University has permitted the defendant no.1 to charge, does not show that the defendant no.2 University has permitted the defendant no.1 to function or that the defendant no.1 is functioning as a competitor to the plaintiffs. It was only if the defendants no.1&2 were said to be charging for a reproduction of the book of the plaintiffs at a price competing with the price fixed by the plaintiffs for the books, could it have been said that the defendant no.1 is functioning commercially.

89. All that is happening in the present case is that instead of the defendant No.2 University issuing the book which may be sought after by a large number of students, to each one of them individually for limited period or limited hours and enabling each student to photocopy the passages or the contents thereof required by him ―in the course of instruction‖ and thereby exposing the book to damage, the defendant No.2 University itself is supplying the said photocopies. It cannot be lost sight of that we are a country with a bulging population and where the pressure on all public resources and facilities is far beyond that in any other country or jurisdiction. While it may be possible for a student in a class of say 10 or 20 students to have the book issued from the library for a month and to laboriously take notes therefrom, the same is unworkable where the number of students run into hundreds if not thousands. According to me, what is permissible for a small number of students cannot be viewed differently, merely because the number of students is larger. Merely because instead of say 10 or 20 copies being made by students individually or by the librarian employed by the University, 100 or 1000 copies are being made, the same would not convert, what was not an infringement into an infringement. 

90. I thus conclude that the engagement as aforesaid by the defendant No.2 University of defendant No.1 does not convert the action of defendant No.2 University as held hereinabove to be not amounting to infringement of copyright in books, to infringement.

91. I next take up the aspect of the international covenants. 

92. Articles 9 and 10 of the Berne Convention supra to which reference was made are as under:
"Article 9 Right of Reproduction:
1. Generally; 2. Possible exceptions; 3. Sound and visual recordings (1) Authors of literary and artistic works protected by this Convention shall have the exclusive right of authorizing the reproduction of these works, in any manner or form.
(2) It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.
(3) Any sound or visual recording shall be considered as a reproduction for the purposes of this Convention. 

Article 10 Certain Free Uses of Works:
1. Quotations; 2. Illustrations for teaching; 3. Indication of source and author (1) It shall be permissible to make quotations from a work which has already been lawfully made available to the public, provided that their making is compatible with fair practice, and their extent does not exceed that justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries. (2) It shall be a matter for legislation in the countries of the Union, and for special agreements existing or to be concluded between them, to permit the utilization, to the extent justified by the purpose, of literary or artistic works by way of illustration in publications, broadcasts or sound or visual recordings for teaching, provided such utilization is compatible with fair practice. (3) Where use is made of works in accordance with the preceding paragraphs of this Article, mention shall be made of the source, and of the name of the author if it appears thereon.‖ 

93. Clauses 9.6 to 9.13 of the Code to the Berne Convention published by the World Intellectual Property Organization in relation to Article 9(2) of the Berne Convention are as under:
"Article 9, paragraph (2) Exceptions (2) It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.
9.6. This provision gives to member countries the power to cut down this exclusive right of reproduction and permit works to be reproduced "in certain special cases". But the freedom allowed them is not total. The Convention adds two conditions in a formula, the drafting of which, in Stockholm (1967), led to prolonged debate, and the interpretation of which produces much difference of opinion. It consists of two phrases which apply cumulatively: the reproduction must not conflict with a normal exploitation of the work and must not unreasonably prejudice the legitimate interests of the author.
9.7. If the contemplated reproduction would be such as to conflict with a normal exploitation of the work it is not permitted at all. Novels, schoolbooks, etc., are normally exploited by being printed and sold to the public. This Article does not permit member countries to allow this e.g., under compulsory licences, even if payment is made to the copyright owner.
9.8. If the first condition is met (the reproduction does not conflict with the normal exploitation of the work) one must look and see whether the second is satisfied. Note that it is not a question of prejudice or no: all copying is damaging in some degree; a single photocopy may mean one copy of the journal remaining unsold and, if the author had a share in the proceeds of publication he lost it. But was this prejudice unreasonable? Here, scarcely. It might be otherwise if a monograph, printed in limited numbers, were copied by a large firm and the copies distributed in their thousands to its correspondents throughout the world. Another example is that of a lecturer who, to support his theme, photocopies a short article from a specialist journal and reads it to his audience; clearly this scarcely prejudices the circulation of the review. It would be different if he had run off a large number of copies and handed them out, for this might seriously cut in on its sales. In cases where there would be serious loss of profit for the copyright owner, the law should provide him with some compensation (a system of compulsory licensing with equitable remuneration).
9.9. Most countries allow a few photocopies to be made without payment especially for personal or scientific use, but expressions of this sort leave a lot of latitude to legislators and the courts.
9.10. Laws, for example the Tunis Model Law, often allow the reproduction of a work for "the user's personal and private use". True, this expression is interpreted in different ways, but in principle it does not cover any collective use and it assumes that the reproduction is not done for profit. The usual example is that of the student who, for study or research purposes, copies a text. Manuscript copies have little impact;
but with the arrival of new copying techniques the situation changes. It is a matter not only of photocopiers but also of tape-recorders.
9.11. It is a little more than child's play to make high quality recordings of both sound and vision, either from discs or cassettes (re-recording) or off the air (television as well as radio). The idea of a limitation to private use becomes less effective when copies can be made privately in large numbers. If practical considerations do not offer copyright owners and their successors in title a chance to exercise their exclusive right of reproduction, it has been suggested that a global compensation might be provided for them, and that the money might be raised by imposing a levy on the material (tape, etc.) on which the sounds and images are fixed, as well as on the apparatus used for fixing. (A working group meeting in Geneva in February 1977 examined the legal problems arising from the use of videograms to make video-copies.) 9.12. Similar solutions (including the creation of collective mechanisms) are suggested in the field of reprography, where the problem is particularly acute because of the number of different users: libraries, archives, documentation centres, public research institutes whether established for profit or not, schools, government departments, etc. Reprography certainly makes a large contribution to the diffusion of knowledge; but it is no less certain that copying on a large scale seriously damages the interests of the copyright owners. These interests must therefore be reconciled with the needs of users. It rests with each country to make appropriate measures best adapted to its educational, cultural and social and economic development (see the conclusions of the sub-committee on reprographic reproduction which met in Washington in June 1975).
9.13. The legislator's task is not an easy one. This paragraph, with its two conditions, provides him with certain guidelines."
(emphasis added) 

94. Article 13 of the Agreement on Trade-Related Aspects of Intellectual Property Rights is as under:
"Article 13 Limitations and Exceptions Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interest of the right holder.‖ 

95. It would thus be seen that under the Berne Convention also, the only binding obligation on the privy countries is to in their respective legislations i) not permit reproduction of the work so as to conflict with a normal exploitation of the work and so as to unreasonably prejudice the legitimate interest of the author; and, ii) to while permitting utilization of the literary works including in publications for teaching ensure that such utilization is to the extent justified by the purpose and compatible with fair practice. Similarly, under the TRIPS Agreement also the member countries have agreed to confine the exceptions to the copyright to the extent they do not unreasonably prejudice the legitimate interest of the right holder. 

96. India, under the international covenants aforesaid, though has the freedom to legislate as to what extent utilization of copyrighted works for teaching purpose is permitted but agreed to ensure that the same is to the extent ―justified by the purpose‖ and does not ―unreasonably prejudice the legitimate rights of the author‖.

97. The international covenants aforesaid thus left it to the wisdom of the legislators of the member / privy countries to decide what is ―justified for the purpose‖ and what would ―unreasonably prejudice the legitimate interest of the author‖. Our legislators, while carrying out the amendments to the Copyright Act are deemed to have kept the said international covenants in mind. Parliament / legislators have permitted reproduction of any work by a teacher or a pupil in the course of instructions. I have already hereinabove, in accordance with the meaning which has been assigned by the Courts to the words / phrase ―in the course of‖ since prior to the use thereof in Section 52(1)(i) and in accordance with the meaning of the word ―instruction‖, interpreted Section 52(1)(i). The legislators have found reproduction of the copyrighted work in the course of instruction to be justified for the purpose of teaching and to be not unreasonably prejudicing the legitimate interest of the author. It is not for this Court to impose its own wisdom as to what is justified or what is unreasonable, to expand or restrict what the legislators have deemed fit. The legislature is not found to have imposed any limitation on the extent of reproduction. Once the legislature which under our Constitution and under the international covenants aforesaid was entrusted to while making law in relation to copyright take a call on what is justified for the purpose of teaching and what will unreasonably prejudice the legitimate interest of the author has not imposed any such limitation, this Court cannot impose the same.

98. In Smita Subhash Sawant Vs. Jagdeeshwari Jagdish Amin (2015) 12 SCC 169 it was held that Courts cannot read any words which are not mentioned in the section. Recently also in Narayan Vs. Babasaheb (2016) 6 SCC 725 it was held that inconvenience and hardship to a person will not be decisive factors while interpreting a provision and that when a bare reading of the provision makes it very clear and gives it a meaning, it has to be interpreted in the same sense as latin maxim dulo lex sed lex which means law is hard but it is law and there cannot be any departure from words of law.

99. In accordance with the aforesaid international covenants, the legislators of some other member / privy countries in the context of their respective countries have worded the exceptions differently and on an interpretation of which legislation, the Courts of those countries have adjudicated and which judgments have been cited by the counsels. I am however of the opinion that the said judgments in the context of different legislations on the basis of perception by the legislators thereof of the purpose of teaching and unreasonable prejudice to the legitimate interest of the author cannot form the bedrock for this Court to interpret the Copyright Act of this country.

100. I am therefore not proceeding to discuss the said judgments. The reference hereinabove by me to some foreign judgments is only to demonstrate the diversity.

101. I therefore conclude the actions of the defendants to be not amounting to infringement of copyright of the plaintiffs. 

102. Once that is so, no trial is required in the suit.

103. The suit is accordingly dismissed. However no costs. 

Decree sheet be prepared.