Month: August 2023

S.no	Contents
1.	Introduction
2.	Antecedents and Evolution of the RTI Act in India
3.	Importance of the Act
4.	Impact of the Right to Information Act, 2005
5.	Cases Related to the Right of Information Act, 2005
6.	Conclusion

Introduction

“A basic tenet of a healthy democracy is open dialogue and transparency”, said Peter Fenn. The RTI Act was passed by the Parliament of India on June 15, 2005, and it came into existence on October 12, 2005. Every citizen of India has been bestowed the fundamental right to free speech and expression under Article 19(1)(a) of the Constitution of India. The right to information regarding matters of public interest becomes a pivotal point when it comes to forming opinions regarding the governance of the nation. RTI assures the citizens that the rights they possess will allow them to have complete transparency on the part of the government. In modern times, the educated as well as the illiterate classes of society want to be informed regarding the functioning and operation of the administrations in the country. They want to be apprised of how their funds and taxes are being utilized by the government. The citizens look forward to maintaining a system of scrutiny of the administrative campaigns in order to keep a check on swindling and corruptible activities. The paramount objective of the Right to Information Act, of 2005, is to strengthen the functioning of the authorities and make sure that no anti-people policies are carried out, and if any such activities are detected, they can be backed by legitimate grounds. India has evolved over a time period of 82 years from being a country where the citizens had no right to demand information regarding the secretive official Acts passed by the colonial officers to being a nation where the Constitution vests the rights of citizens to have access to every information regarding the working of the state machinery wherein the citizens are allowed to know the power and authority vesting in the officers, the utilization of the funds, as well as “information” involving and pertaining to press releases, records, notices, circulars, contracts, memos, models, public data, and reports released by Ministries, public sector undertakings, etc. The Hon’ble Supreme Court has also substantiated at times the need for an act that allows the citizens to have knowledge in order to better judge and inspect the functioning of the government.¹

Antecedents and Evolution of the RTI Act in India

• Universal Declaration of Human Rights, 1948: It mandated the media to provide anyone and everyone seeking any information in regards to the government, irrespective of the frontiers, with the right medium to receive that information. It cleared the way forward for demanding the right to information in India.
  
• International Covenant on Civil and Political Rights, 1966: It encouraged the idea of freedom of speech and expression, under which people shall be provided with transparency to seek information and proclaim opinions and ideas.
  
• Mazdoor Kisan Shakti Sangathan: In the 1990s, the organization started the movement relating to RTI with regard to increasing lucidity at the village governance level and demanding the minimum wage. Although the movement didn’t turn out to be a successful moment because of a lack of a substantial platform and failed due to having a rural background, it still managed to draw the attention of significant personalities, including the media, lawyers, jurists, dignitaries, academicians, bureaucrats, and legislators, and led to the formation of the National Campaign on the People’s Right to Information (NCPRI)’. A ‘Shourie Committee’ was formed, which was led by the former bureaucrat H.D. Shourie, who was also a consumer rights campaigner. In July 2000, the draft prepared by the Shourie Committee was presented along with certain amendments and alterations and came into existence as the ‘Freedom of Information Bill, 2000’. The parliament passed the ‘Freedom of Information Act’ in 2002, and it’s a precedent of the current Right to Information Act that was passed by the parliament in June 2005 and came into implementation in October 2005.²

Importance of the Act

• Accountability: According to Abraham Lincoln, “Democracy is a rule of the people, for the people, and by the people” (Democracy is a rule of the people, for the people, and by the people). As a result, all authorities operating at various levels are accountable to the nation’s citizens, and each citizen upholds the right to hold the authority in question accountable for its actions. RTI has established a responsibility factor that applies to all government employees, not just those who are elected to serve in that capacity.
  
• Transparency: The Constitution has provided several rights to the government to work freely in an independent and cohesive manner, maintaining certain boundaries regarding their work profile, but RTI has also maintained within its provisions that the government should work on terms that are favourable to the public and nation, and to solidify that fact, it lays down that the public interaction on the part of the government should be absolutely transparent. Citizens possess the right to knowledge about where and how the taxes given by them are being utilized by the government, how the government functions, and what measures are being taken by the government to run the country.
  
• Rule of Law: RTI has also played a role when it has come down to posing certain limitations on the discretionary powers of the authorities. It has been established that the law is the supreme authority, and nobody has the power to cross the supremacy of the Constitution of India. Improvisations in regards to seeking judicial actions in cases of denial of information on inquiry have established a control on the powers of the government and have increased the efficiency rate of work in the government offices as well.
  
• Role of Media: Since the implementation of RTI, the role of the media and press has also received attention. From educating the public about their rights to publishing public opinion polls and assessments of the government and officials, the media has played a significant role in keeping the public informed about how the government operates, everything that is happening in the world, all international deals that are being made with other countries, and government policies.³

Impact of the Right to Information Act, 2005

RTI was implemented in order to improve communication between the government and its constituents. It has established the nation’s official definition of moral leadership. Keeping citizens and authority on an equal footing has caused changes in the orientation of superiority. The citizens now have a voice and a manifesto through which to voice their concerns, limit the authority granted to government officials and authorities, and monitor the services that are being rendered to them. The Act outlines a number of provisions and actions that the public may take to voice complaints and inquiries about any work done by any public office.

Earlier, many people were unable to benefit from the schemes and amenities that the government used to publicize, but due to a lack of familiarity and awareness, they had no access to any of those. However, since the RTI Act, the government has mandated that several sectors correspond and make sure that the general public consumes the benefit of every such service.⁴

RTI has proven to be successful in manoeuvring the corruption rate in the country, which was one of its prime agendas. Now every person sitting in government offices on a chair fears exposure, and it has led to improvisation in their accountability towards the nation. It has led to a significant diminution in bribery. It has made the public officers more service-oriented; people have started taking their jobs seriously because the general public wants an on-paper record of whatever roles the officers are imparted with and whether they are doing their work with scrupulousness.

Every level of administration in our nation, from the local to the federal, has greatly benefited from it. It has highlighted the seriousness of the statement that everyone holding a position of authority is answerable to the public in every way permitted, including giving written testimony upon request or producing any document or report for inspection. It calls for the full disclosure of all records that the public has a right to access.

Cases Related to the Right of Information Act, 2005

In the case of Hamdard Dawakhana vs. Union of India⁵, the Drug and Magic Remedies (Objectionable Advertisement) Act had put restrictions on advertising drugs with claims of having magical properties, which was challenged in court, saying that it was restricting their freedom to advertise. The Supreme Court held that advertising is no form of speech but a mode of trade and commerce, and therefore no such ideas can be put forth that might affect the purchasing power of the buyer. The customers have the right to information regarding what they’re purchasing.

In the landmark judgment of State of U.P. vs. Raj Narain⁶, Justice K.K. Matthew noted that in a “government of responsibility like ours,” where every officer is bound to be accountable for their actions, there has to be maintained a transparent relationship between the public and the citizens, and the public should be provided with every piece of information that relates to public affairs.

The court in the case of S.P. Gupta vs. Union of India⁷ granted constitutional validity to the Right to Information, highlighting the spirit of Article 19(1)(a)  and drawing prominence to the fact how essential openness of government is when it comes to establishing the notion of an ideal democracy, and it drew a parallel significance of the Right to Information with the freedom of speech and expression by noting that the Act follows a correct line of interpretation of the Fundamental Right.

The court again emphasized the contribution of freedom of speech and expression in running the country in a systematic manner while pronouncing its judgment in the case of Union of Civil Liberties vs. Union of India⁸, where everyone has a right to speak against what they do not consider a righteous attempt at the management of policies.

Conclusion

So far, we’ve understood the magnitude of the word ‘information’ that covers under its ambit every public figure, report and stance of the government that is released at different stages of their governance in which they bring amendments, pass orders and legislation, herald schemes and policies, several documents related to public interest matters, and the connotation of the right to sustain it. The crux of introducing the Act is to provide a platform for the general public to express their opinions regarding what they consider to be the right policy for them and whether or not they’re satisfied with the utilization of the resources for which they are paying a contribution and share to the government. The act was implemented because only when the citizens of a nation are aware of the affairs of the country and when the population is educated regarding matters concerning them can they decide a future for the country and can we progress in the world scenario. The passing of the act was the need of the time so that no one suffers from a lack of government information and everyone has a record of every function of the legislators of our country. It is a transition from the arbitrary system of governance to an unbiased and transparent form of government where everybody has a right to be informed and be given a reason for every course of action being taken.

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Endnotes:

1. The Right to Information Act, 2005: https://rti.gov.in/RTI%20Act,%202005%20(Amended)-English%20Version.pdf
2. Second Administrative Reforms Commission: https://darpg.gov.in/sites/default/files/rti_masterkey1.pdf
3. Report of the Workshop on The Right to Information and the Media Past Experiences and Future Possibilities: https://www.humanrightsinitiative.org/programs/ai/rti/india/workshops/wksp_rep_on_rtiact05_pune.pdf
4. Guide on the Right to Information Act, 2005: https://rti.gov.in/RTICorner/Guide_2013-issue.pdf
5. Hamdard Dawakhana vs. Union of India, P. (CRL)558/2016
6. State of Uttar Pradesh v. Raj Narain, 1975 AIR 865, 1975 SCR (3) 333
7. S.P. Gupta v UOI, AIR 1982 SC 149
8. Article 19 of the Constitution of India
9. Union of Civil Liberties vs. Union of India, AIR 1997 SC 568, (1997) 1 SCC 301

This article is authored by Vanshika Manish Tiwari, a second-year student at Vivekananda Institute of Professional Studies, GGSIPU.

S.no	Contents
1.	Introduction
2.	Definition of Section 74 of the Indian Contract Act
3.	Time Aspects and Other Dispositions
4.	Importance of Penalties
5.	Jurisdiction of Section 74 of the Act
6.	Analysis of Section 74 of the Act
7.	Principal of Mitigation
8.	Conclusion

Introduction

Since the passage of the colonial Indian Contract Act of 1872 (ICA)¹, much has changed or developed in the manner that commerce is done. Due to the act’s age, there are a few flaws that need to be reviewed and fixed to ensure efficient corporate operations. Unliquidated losses, which apply where a contract lacks a section addressing liquidated damages, are discussed in Section 74 discusses liquidated damages.

This clause deals with liquidated damages, however, the act doesn’t define them, and the courts have frequently issued contradictory rulings in various circumstances. These decisions are frequently viewed incorrectly or differently. This study aims to clear up any ambiguity about significant liquidated damages rulings. It is far more difficult to assert the liquidated damages since you have to demonstrate the extent of the losses the harmed party produced.

There are very few contracts where the damages in the event of a breach cannot be determined. In these kinds of circumstances, it might be challenging to assert liquidated damages that equal the actual harm. The ‘genuine prior estimate of losses’ provision, which the party who breaches the contract attempts to exploit, is given weight by the courts in determining whether liquidated damages are appropriate or not. Additionally, there is no distinction between a penalty and liquidated damages under Indian contract law because the awarded compensation cannot exceed the contract’s maximum value.

Definition of Section 74 of the Indian Contract Act

“The complaining party is entitled to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named, or the case may be, the penalty stipulated for when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty,”² according to the law.

Exception of Section 74

Any person who signs a bail bond, recognizance, or another similar document, or who offers a bond by law, a directive from the [Central Government] or a 3[State Government] for the accomplishment of a public duty or act in which the public is interested, is liable to pay the full sum specified therein if the condition of the document is broken.

Illustrations

1. In exchange for failing to pay B Rs. 500 on a specific day, A has agreed to pay B Rs. 1,000. On that day, A fails to pay B the sum of Rs. 500. A must pay B the amount of money the court finds appropriate, up to a maximum of Rs. 1,000.
   
2. A signs a recognizance obligating him to appear in court on a particular day in exchange for a fine of Rs. 500. His recognizance is lost. He is responsible for paying the entire fine.
   
3. A and B have an agreement that if A works as a surgeon in Calcutta, he would pay B Rs. 5,000. A is a surgeon who works in Calcutta. B is entitled to compensation that the Court deems appropriate, up to a maximum of Rs. 5,000.

Time Aspects and Other Dispositions

Time is a crucial component of this specific Section 74 of the ICA 1872. The Indian Contract Act of 1872 has significant repercussions that follow a delay, making it difficult for the party in default to immediately breach the contract. The important aspect of these actions is their profound philosophy. The contractual provision of a penalty is meaningless in the absence of any loss. 

The idea of taking advantage of rewards coming from a violation of a contract is mentioned in the Indian Contract of 1872. The bare act states that “When the vendor sells to the defaulting vendee is not eligible to receive the benefits of the later contract if the price is higher than the market price on the day of delivery.” This is accurate even if the vendor received the advantages of a different contract that was desirable to him in return for the loss of the contract that the defaulting vendee had breached.

Importance of Penalties

The essence of a penalty is the payment of the agreed-upon monetary recompense to the party who was wronged. The fundamental idea behind compensation is that the aggrieved party should regain its prior position before the contract’s performance. The landmark case Tata Iron & Steel Co Ltd v. Ramanlal Kandoi³ established this rule, stating that it is important to be aware of the events that caused the plaintiff’s loss of income. The innocent person needs to comprehend the damages.

A comprehensive analysis of the types of fines and damages is necessary. The mere use of terms like “loss” or “damages” does not make the defaulting party liable. A sequence of events must occur for the loss brought on by the contract’s breach to be fairly assessed. Section 74 of the Indian Contract Act abolishes the rather convoluted differences established under English Common Law between provisions allowing for the payment of liquidated damages and clauses in the form of penalties.

Jurisdiction of Section 74 of the Act

Bal Kishan Das v. Fateh Chand⁴, the Court explained the application of Section 74 by dividing situations involving damages into two categories:

1. First, whether the sum to be paid in the event of contract violation has been predetermined and 
2. Any further penalty clauses that may be included in the contract.

Analysis of Section 74 of the Act

When considering the application of Section 74 in Fateh Chand v. Bal Kishan Das⁵, The Court stated that it handles issues involving damages, which are divided into two categories. when the compensation due in the case of a contract violation is predetermined. Where penalties in the form of extra provisions may be included in the contract.

The Supreme Court noted that the expression is meant to embrace several sorts of contracts in Maula Bux v. Union of India⁶, It might not be practicable for the court to determine compensation in cases of contract breaches. If the sum agreed upon by the parties is a real pre-estimate and not a penalty, then it may be used in some circumstances as the benchmark for appropriate compensation.

The party seeking compensation must establish the loss incurred in cases when a monetary loss may be identified. In these situations, the courts must consider whether the amount sought is reasonable. The courts will do this while using the Section 73 principles. The magnitude of the damage incurred by a party must thus be shown in every instance. The obligation to establish the level of loss was waived in some instances, however, where the harm was difficult or impossible to demonstrate.

In Indian Oil Corporation vs. Messrs Lloyds Steel Industries Ltd⁷, the Delhi Court ruled that IOC was unable to receive liquidated damages since it had not experienced any losses as a result of the contractor’s construction and commissioning delays at the terminal in Jodhpur.

The court determined that the pipeline arrived at the Jodhpur port significantly later than the construction project’s completion date and that the terminal could not have been used for commercial purposes without the pipeline.

According to the Supreme Court’s decision in Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd⁸, when evaluating whether the party seeking damages is entitled to them, the conditions of the contract must be taken into account. unless it is determined that such an estimate of losses or compensation is excessive or acceptable, allowing for liquidated damages in the case of a contract violation.

The person who was harmed by a breach of contract may now obtain a decree without having to show that he experienced loss or damage thanks to Section 74. Even if no real loss is demonstrated to have been experienced as a result of the contract violation, the court is nonetheless permitted to award appropriate damages in such a situation.

If the damages are a true pre-estimate by the parties as the standard for fair damages, the court may nevertheless award them even if they are not a punishment or are reasonable. The court may find it challenging to determine the appropriate damages in some contracts.

Principal of Mitigation

According to the idea of mitigation, the complaint must make a concerted effort to accomplish considerably more in the typical court of commerce. The efforts he takes to remove himself in the case of a contract breach shouldn’t be measured on a high-tech scale. The complainant doesn’t need to endanger his assets, his reputation, or that of his business to reduce the damages that the defendant will be compelled to cover. In M Lachia Setty & Sons Ltd. v. Coffee Board Bangalore⁹, the Supreme Court decided that the mitigation principle should be the only consideration made while calculating damages rather than granting any rights to a party that violated the contract. In this case, it was determined that the complainant was required to do all reasonable efforts to limit the loss and that he was barred from pursuing claims for avoidable losses if he failed to do so.

According to the decision in Esso Petroleum Co. Ltd. v. Mardon¹⁰, the court has the jurisdiction to treat a prediction made concerning the subject of a contract at the pre-negotiation stage as more than just an expression of opinion and as a continuing guarantee. This is because the prognosis was provided to sway the other party into signing a contract. The person who produced the prediction may be held accountable for a breach of warranty if the estimate is subsequently found to have been prepared with complete negligence.

 In Murlidhar Chiranjilal v. Harishchandra Dwarkadas¹¹, according to the Supreme Court, there are two criteria used to determine damages when a contract for the sale of commodities is broken. The first step is to place the party that can prove the other party did not provide what they were promised in a position financially equivalent to what would have happened if the contract had been completed. The plaintiff is also not entitled to any damages resulting from failure to take reasonable efforts to mitigate the loss resulting from the breach.

Conclusion

Thus, it follows that the requirement that the loss sustained be shown violates the entire reason why liquidated damages provisions are included in contracts. The Act’s Section 74 emphasizes the need for fair pay. If the contract’s compensation was offered as a penalty, The consideration would be altered, and the party would only be eligible for damages reimbursement. However, if the compensation provided in the contract is a true pre-estimate of loss, which the party recognized at the time of contracting, there is no doubt as to how to prove such loss. In actuality, it is the opposing party’s responsibility to provide evidence that no loss is anticipated to result from such a breach.

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Endnotes:

1. Indian Contract Act 1872
2. Section 74 of the Indian Contract Act 1872
3. Tata Iron & Steel Co Ltd v. Ramanlal Kandoi, (1971) 2 Cal. Rep. 493, 528
4. Bal Kishan Das v. Fateh Chand, AIR 1963 SC 1405
5. Fateh Chand v. Bal Kishan Das, AIR 1963 SC 1405
6. Maula Bux v. Union of India, (1969) 2 SCC 554
7. Indian Oil Corporation vs. Messrs Lloyds Steel Industries Ltd, 2007 (144) DLT 659)
8. Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd, (2003) 5 SCC 705
9. M Lachia Setty & Sons Ltd. v. Coffee Board Bangalore, (1981) SCR (1) 884
10. Esso Petroleum Co. Ltd. v. Mardon, [1976] QB 801
11. Murlidhar Chiranjilal v. Harishchandra Dwarkadas, 1962 SCR (1) 653

This article is authored by Animesh Nagvanshi, a student at ICFAI University, Dehradun.