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Trade Union is an operational creditor under the Insolvency and Bankruptcy Code, 2016

Supreme Court: Holding that the trade union represents its members who are workers, to whom dues may be owed by the employer, which are certainly debts owed for services rendered by each individual workman, who are collectively represented by the trade union, the bench of RF Nariman and Vineet Saran, JJ said,

“to state that for each workman there will be a separate cause of action, a separate claim, and a separate date of default would ignore the fact that a joint petition could be filed under Rule 6 read with Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, with authority from several workmen to one of them to file such petition on behalf of all.”

The Court was deciding the question whether a trade union could be said to be an operational creditor for the purpose of the Insolvency and Bankruptcy Code, 2016.

The Court noticed that a trade union is certainly an entity established under a statute – namely, the Trade Unions Act, and would therefore fall within the definition of “person” under Sections 3(23) of the Code. This being so, it is clear that an “operational debt”, meaning a claim in respect of employment, could certainly be made by a person duly authorised to make such claim on behalf of a workman. Rule 6, Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 also recognises the fact that claims may be made not only in an individual capacity, but also conjointly.

It was further noticed that a registered trade union recognised by Section 8 of the Trade Unions Act, makes it clear that it can sue and be sued as a body corporate under Section 13 of that Act. Equally, the general fund of the trade union, which inter alia is from collections from workmen who are its members, can certainly be spent on the conduct of disputes involving a member or members thereof or for the prosecution of a legal proceeding to which the trade union is a party, and which is undertaken for the purpose of protecting the rights arising out of the relation of its members with their employer, which would include wages and other sums due from the employer to workmen.

The Court, hence, said,

“Looked at from any angle, there is no doubt that a registered trade union which is formed for the purpose of regulating the relations between workmen and their employer can maintain a petition as an operational creditor on behalf of its members. We must never forget that procedure is the handmaid of justice and is meant to serve justice.”

[JK Jute Mill Mazdoor Morcha v. Juggilal Kamlapat Jute Mills, CIVIL APPEAL NO.20978 of 2017, decided on 30.04.2019]

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Mere search under Section 240A of Companies Act without seizure won’t suffice the purpose of investigation

Supreme Court: Asking High Court to be more circumspect before it restrains an investigation under the statutory authority of the Director General of the Competition Commission, the bench of Dr. DY Chandrachud and Hemant Gupta, JJ remitted back a matter to Delhi High Court that dealt with the powers of search and seizures of the Director General of CCI.

Relevant Provisions

Section 41(3) of Competition Act, 2002 specifically incorporates a reference to Section 240A in its application to an investigation by the Director General under the provisions of the Competition Act 2002.

Under Section 240A, an Inspector who has reasonable ground to believe that books and papers of, or relating to, any company may be destroyed, mutilated, altered, falsified or secreted may apply to the Magistrate to secure an authorisation for the seizure of the books and papers.

Background

The Chief Metropolitan Magistrate allowed the application on 17 September 2014. The search operation was carried out on 19 September 2014.

An interim application was filed before the Delhi High Court in the pending writ petition for quashing the search and seizure and for the return of all documents, hard drives and laptops seized during the course of the search and seizure operation and for a stay on the investigation.

The Delhi High Court, by its order dated 26 September 2014, stayed further proceedings before the Director General of Investigation.

Applying the provision under Section 240A of the Companies Act, 1956, the High Court had held that a reading of the order passed by the Chief Metropolitan Magistrate does not indicate any authorisation to the Director General to carry out any other exercise other than searching for relevant material.

Ruling

The Court noticed that the provisions of Section 240A do not merely relate to an authorisation for a search but extend to the authorisation of a seizure as well. Unless the seizure were to be authorised, a mere search by itself will not be sufficient for the purposes of investigation.

It, hence, held,

“Having due regard to the provisions of Section 240A and the underlying purpose of Section 41(3), we are of the view that the blanket restraint which has been imposed by the learned Single Judge on the appellants utilising the seized material for any purpose whatsoever was not warranted. The High Court has blocked the investigation on an erroneous construction of the powers of the Director General.”

[Competition Commission of India v. JCB India Ltd., CRIMINAL APPEAL NO. 76-77 OF 2019, order dated 15.01.2019]

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Trade Secrets — Intellectual Property’s Underdog

What do Google’s search algorithm, Coca-Cola and KFC’s original recipe, the selection criteria for the New York Times annual best seller list and the Big Mac special sauce recipe, share in common? These valuable recipes, methods and selection criteria are protected as trade secrets. Also called the “other intellectual property right (IPR)”, trade secrets does not dominate the popularity index with regard to the types of IP protection sought, corporations and individuals generally prefer other modes of IP protection. However, in the family of intellectual property rights, this right may be the oldest form because who does not have secrets. And what better measure to protect the secret than by keeping it undisclosed? Here a line of differentiation must be drawn between a personal and a professional secret as some professional secrets hold commercial value, like Coca-Cola’s recipe. What is the status of this form of IPR? A lack of consensus is found among nations and scholars alike regarding the recognition and treatment of trade secrets.

In this age of overcommunication, Coca-Cola’s recipe is one of the best kept secrets in the world. The company goes nostalgic in an account of its 125 years journey and presents proudly on its website some facts of its recipe.[1] The recipe was developed by John S. Pemberton, a pharmacist in 1886 and has been closely guarded, for more than a century.[2] Competitors have fiercely hunted for the recipe, yet apparently, this best kept secret has aided the Coca-Cola Company to become the successful, globally recognised brand it is today. Similarly, KFC has been a secret keeper for Colonel Harland Sanders’ recipe of 11 herbs and spices used by the fast food restaurant chain which has become its flagship product. The recipe is more than 70 years old and was apparently scribbled on the back of a door, which is being followed till date.[3] KFC has gone to a great length to protect this prized secret recipe, when it recently built a brand new, hi-tech home for the original handwritten recipe where the recipe is protected in a digital safe weighing more than 770 pounds encased in two feet of concrete with a 24-hour video and motion detection surveillance system.[4]

Where do these facts leave trade secrets with regard to the protection they provide and most importantly where does inclusion of trade secrets as a form of IP protection stand? Michael Risch opines trade secrets to be curious anomalies in intellectual property law and goes to argue that despite being the most important and litigated form of intellectual property, trade secrets are given derogatory treatment citing another work which terms this form “parasitic”.[5] On the contrary, trade secrets are justified by the economic benefits that flow from their existence, most notably incentives for businesses to spend less money protecting secret information or attempting to appropriate secret information.[6]

My Way or Yours? A Historical Perspective to Protection of Trade Secrets

The history of trade secret law is an interesting study in how certain intellectual property rights have developed. Whereas copyright, patent and trade mark law find legal justification through statutes, the trade secret concept and related reliefs grew out of the common law. Indeed, the very assumptions underlying patent and copyright laws—that government-granted rights can serve to incentivise the creation and sharing of new ideas and expression—are diametrically opposed to the notion of keeping information secret to gain a competitive advantage.[7]

The concept that so-called business or “trade secrets” were entitled to legal protection spread rapidly throughout the world. As early as the Renaissance, most European nation-States had laws that protected businesses (notably, the guild cartels) from those who used their secret processes and ideas without permission. During the Industrial Revolution, courts and legislatures translated these early laws into statutes that protected “industrial secrets”. Many of these statutes are still in force today, albeit in modified form. The modern trade secret regime traces most clearly and directly to the Industrial Revolution and is primarily an Anglo-American doctrine.

Currently, nations differ regarding their standpoint on treating trade secrets. Some have chosen to grant statutory relief to an act of trade secret violations while others treat the violations through popular principles of common law breach of confidence, etc. Looking at how nations seek to work together on various legal issues it is surprising how a unified treatment of trade secrets has not been possible. There is clearly no consensus on whether it be treated as a creature of contract law, tort, property or criminal law. With the continued confusion, none of these different justifications have proven entirely persuasive. Worse, they have contributed to inconsistent treatment of the basic elements of a trade secret cause of action, and uncertainty as to the relationship between trade secret laws and other causes of action.[8] Robert Bone has gone so far as to suggest that this theoretical incoherence suggests that there is no need for trade secret law as a separate doctrine at all.[9]

There is no State agency that “issues” (or even registers) trade secrets, thus categorising it separately from other forms of IP.[10] At the judicial level, courts will find misappropriation of trade secrets in two circumstances: (1) where the secrets were obtained by theft or other improper means, or where they were used; or (2) disclosed in violation of a confidential relationship agreement. However, trade secret laws do not protect against independent discovery or invention. Nor do they prevent competitors from “reverse engineering” a legally (read fairly) obtained product to determine the secrets contained inside. Violations of trade secrets entitle the owner to damages and in some cases injunctions against the use or further disclosure.[11]

The International Framework of Trade Secrets

At the international level, the Trips agreement was the first international agreement to accord express protection to trade secrets. The agreement while defining trade secrets laid out its approach, based on the notion that in order to establish and maintain a fair and free market, protection against unfair competition should include protection for undisclosed information. While presenting this approach and defining the term, the Trips agreement referred to the prior existing protection as presented in the Paris Convention for the Protection of Industrial Property.

Trade secrets are dual in nature, they are confidential as well as commercial. To get the commercial benefit out of the secret, the owner must share it with a limited number of people or partners. Thus, laws expect and account for a certain amount of protected disclosure, within a constrained circle.[12] Nevertheless, even if trade secrets are not “secret” in the strictest sense of the term, they must, in fact, remain non-public and known only to a limited number of people.[13] The Trips definition of trade secrets reflects a broadly similar understanding of the term across nations and addresses its dual nature as confidential but commercial. Moreover, in order to place all nations on a similar footing, the Trips platform took into consideration then current practices in many countries while laying down a path for shaping subsequent laws.

7. Protection of undisclosed information.[14]

Article 39

In the course of ensuring effective protection against unfair competition as provided in Article 10bis of the Paris Convention (1967), members shall protect undisclosed information in accordance with Para 2 and data submitted to Governments or governmental agencies in accordance with Para 3.[15]

Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information[16]:

(a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

(b) has commercial value because it is secret; and

(c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.

Members, when requiring, as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilise new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use. In addition, members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure that the data are protected against unfair commercial use.[17]

These three conditions define trade secrets in a manner covering a potentially very large scope of economic activity. The range of subject-matter covered by trade secrets may be open-ended, though often trade secrets fall into one of two broad categories: technical information (e.g. technical plans and formulae) and confidential business information (e.g. customer lists and marketing strategies).[18] However, an interesting point is that trade secrecy does not provide an exclusive right for a specific time-limit, which means its discovery by a second party through fair means or entry in the market, and they can run out in the regular course of the competition, unlike patented inventions or copyright protected content.

Conclusion

Trade secrets are a form of intellectual property, serving the same purpose as patent, trade mark and copyright laws i.e. promotion of innovation. While protection under trade secrets results in reduced investment in terms of money and time, on the contrary it does not provide an exclusivity over the secret, if a second party learns the information through fair means in the market. A proper understanding of trade secrets as an intellectual property right will let them be absorbed by society and encourage the formation of a law designed in order to promote innovation.

With varying patentability standards across nations, patent rights have become increasingly uncertain, especially when there is a movement in many countries to further raise the bar as far as the patentability criteria are concerned. To address this situation if the trade secret law is strengthened across the world, it will provide a viable option to inventors to keep their inventions secret. More importantly, stronger protection under trade secret law will ensure enhanced protection to tacit knowledge or know-how that may complement a patent, enabling the owner to protect his patented technology better in fact even beyond the patent period.

India does not have a dedicated law in place to protect trade secrets, however, there is a rich stock of jurisprudence that got introduced through cases, covering the definition and scope of trade secrets, protection remedies and so on. However, there is an increasing expectation that India introduces a statutory protection for trade secrets but time alone can tell whether it is to take place.

*Hetvi Trivedi is Research Associate, GNLU-GUJCOST Research Centre of Excellence in IP Laws, Policies & Practices.

[1] Coca-Cola journey, available at <https://www.cocacolacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2011/05/Coca-Cola_125_years_booklet.pdf>.

[2] Ibid.

[3] What Made Us Great is Still What Makes Us Great, available at <https://www.kfc.com/about>

[4] R. Mark Halligan and David A. Haas, The Secret of Trade Secret Success, available at <https://www.forbes.com/2010/02/19/protecting-trade-secrets-leadership-managing-halligan-haas.html#77ea0d661372>.

[5] Michael Risch, Why do we have Trade Secrets, p. 3 (2007).

[6] Id., p. 5.

[7] Id., p. 6.

[8] Miles J. Feldman, Toward a Clearer Standard of Protectable Information: Trade Secrets and the Employment Relationship, 9 High Tech. LJ 151, 161-163 (1994).

[9] Robert G. Bone, A New Look at Trade Secret Law: Doctrine in Search of Justification, 86 California Law Review 241 (1998).

[10] Peter S. Menell, Mark A. Lemley and Robert P. Merges, Intellectual Property in the New Technological Age: 2017, Vol. I: Perspectives, Trade Secrets and Patents, p. 62 (2017).

[11] Ibid.

[12] OECD, Enquiries into Intellectual Property’s Economic Impact, p. 132 (2015).

[13] Ibid.

[14] Trips agreement, available at <https://www.wto.org/english/docs_e/legal_e/27-trips.pdf>.

[15] Ibid.

[16] Ibid.

[17] Ibid.

[18] Id., at p. 62.

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Pat HC | Immoral Trafficking: Hotel owner present in room adjacent to rooms from where couples found in semi-naked condition – matter requiring complete trial

Patna High Court: The Bench of Ahsanuddin Amanullah, J. dismissed a hotel owner’s petition assailing dismissal of the application for his discharge, holding that since couples were found in semi-naked condition in hotel rooms adjacent to petitioner’s room, it was a matter requiring a complete trial.

A case of immoral trafficking was registered against the petitioner, pursuant to which he filed an application for discharge under Sections 227 and 228 of the Code of Criminal Procedure, 1973. The said application was rejected by the Magistrate. Hence, the instant petition was filed under Section 482 CrPC.

Learned counsel for the petitioner, Mr Shri Prakash Srivastava, submitted that as per Section 15 of the Immoral Traffic (Prevention) Act, 1956 only a special police officer is empowered to search without a warrant. Since the raid at petitioner’s hotel was not conducted by a special police officer, the whole search was vitiated in law and no criminal prosecution based on the same was permissible. Further, no medical examination was done on the couples produced before the Magistrate to establish any scientific evidence relating to there being immoral trafficking.

Learned counsel for the respondent, Mr Pramod Kumar, submitted that the raid was conducted in presence of Additional/Assistant Superintendent of Police who is notified as a ‘special police officer’ under the Act. Further, Section 15(5-A) of the Act provides for examination by a registered medical practitioner only for the purposes of determination of age, or detection of any injuries. Lastly, the petitioner, being the owner, was in the room adjacent to rooms where couples were recovered in semi-naked condition and, thus, he could not take the plea of innocence or ignorance.

The Court opined that no legal provision had been violated. Petitioner being the owner of hotel, and being present in the room adjacent to rooms from where couples were found in semi-naked condition, at this stage, could not be said to be innocent. Thus, the petition was dismissed holding that a full-fledged trial was required in the matter.[Sudhir Kumar v. State of Bihar, Criminal Miscellaneous No. 49011 of 2014, Order dated 06-03-2019]

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Supreme Court Monthly Roundup – April 2019

MORE STORIES

Payment of Gratuity Act applies to employees of the local bodies

Liberal payment of gratuity is in the interest of the employees, thus, the gratuity would be payable under the Payment of Gratuity Act.

SC declares February 2018 RBI Circular ultra vires’

All actions taken under the said circular, including actions by which the Insolvency Code has been triggered must fall along with the said circular.

No bail for businessman Zahoor Watali accused in a terror funding case

The accusation against Watali was of being a part of a larger conspiracy to systematically upturn the establishment to cause secession of J & K from the Union of India.

Age of the case can’t displace the necessity of taking material evidence on record

The age of a case, by itself, cannot be decisive of the matter when a prayer is made for examination of a material witness.

Widow can’t claim ownership over a mutated property under Section 14 of Hindu Succession Act

The mutation of a property in the revenue records are fiscal proceedings and does not create or extinguish title nor has it any presumptive value on title. It only enables the person in whose favour mutation has been ordered, to pay the land revenue.

Section 44(1)(e) of the Maharashtra Municipal Council Act creates independent liability for unauthorised construction de hors criminal action

Section 44(1)(e) creates an independent liability or rather creates disqualification as provided thereunder. This is de hors the criminal action. There is nothing brought to our notice to conclude that action under Section 44(1)(e) must be preceded by a criminal action and conviction thereunder.

Rule 8(2)(i) of the Rajasthan Prisons (Shortening of Sentences) Rules, 2006 constitutional

Manifestly remission not being a matter of right, much less upon completion of 14 years of custody, but subject to rules framed in that regard, including complete denial of the same in specified circumstances, as a matter of State policy, nothing prevents the State from imposing restrictions in the manner done by Rule 8(2)(i) to consider claims for remission.

Minimum Wages Act does not empower Govt to alter the terms of contract; June 2007 Notification partly quashed

There is no power vested in the Government by the Act to make alterations to the terms of a contract. The Act only confers jurisdiction in Government to fix/revise the minimum rate of wages notwithstanding the contract.

Bhobishyoter Bhoot row: West Bengal Govt to pay Rs. 20 lakhs to the Producers for attempting to silence speech

The police are not in a free society the self-appointed guardians of public morality. The uniformed authority of their force is subject to the rule of law. They cannot arrogate to themselves the authority to be willing allies in the suppression of dissent and obstruction of speech and expression.

Practice of summoning public officers not proper as public suffers due to their absence

The practice of summoning officers to court is not proper and does not serve the purpose of administration of justice in view of the separation of powers of the Executive and the Judiciary. If an order is not legal, the Courts have ample jurisdiction to set aside such order and to issue such directions as may be warranted in the facts of the case.

Court can’t directly appoint arbitrator if parties have not exhausted remedies under Arbitration Agreement

To fulfil the object with terms and conditions which are cumulative in nature, it is advisable for the Court to ensure that the remedy provided as agreed between the parties in terms of the contract is first exhausted.

Employee is entitled to full back wages if charges against him are found to be malicious

If an employee is involved in embezzlement of funds or is found indulging in demand and acceptance of illegal gratification, the employer cannot be mulcted with full back wages on the acquittal of the person by a criminal Court, unless it is found that the prosecution is malicious.

IN OTHER NEWS

SC Collegium | Elevation of Judges in the Supreme Court

Collegium Resolutions | Addl. Judges of Gauhati, Jharkhand and Chhattisgarh HC to be appointed as Permanent

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Panchayat Samiti members have right to vote on the ‘No Confidence Motion’

Supreme Court: The Bench of AM Khanwilkar and Ajay Rastogi, JJ held that the provisions in the Andaman and Nicobar Islands (Panchayats) Regulation, 1994 under consideration in no way exclude the MP, muchless expressly, from participating in the special meeting and vote on the ‘No Confidence Motion’. As a matter of fact, the provision in the Regulation under consideration is an inclusive one and explicitly permits all (total) members to participate in the special meeting and vote on the ‘No Confidence Motion against the Pramukh or UpPramukh, as the case may be.

The bench was posed with the question relating to

the inclusion or exclusion of the Member of the House of Parliament (MP) representing the Union Territory of Andaman and Nicobar Islands, who is also an exofficio member of the Panchayat Samiti, for reckoning the quorum of a special meeting regarding motion of no confidence against the Pramukh of the Little Andaman Panchayat Samiti, it noticed,

whether he/she can exercise his/her vote on the ‘No Confidence Motion’ within the meaning of the provisions of Andaman and Nicobar Islands (Panchayats) Regulation, 1994 and the Andaman and Nicobar Islands (Panchayats Administration Rules) 1997.

Stating that it is a well-established position that the right to elect, and including the right to be elected and continue on the elected post, is a statutory right, the bench said,

“neither Article 243C nor the Regulation made by the State Legislature or the Rules framed thereunder expressly exclude the other members of the Panchayat Samiti referred to in Section 107(3) of the Regulation from exercising their vote on a ‘Motion of No Confidence’.”

The Court said that the category of persons referred to in Section 107(3) of the Regulation are also, in one sense, elected representative (though not by direct election from territorial constituencies in the Panchayat area) and, therefore, their participation and voting on the ‘No Confidence Motion’ has been expressly permitted by the Regulation and the Rules. That cannot be undermined on the basis of the common law principle, so long as the governing statutory provisions are in the field.

“if a person has been elected to an office through democratic process and when such person loses the confidence of the representatives who elected him, then those representatives should necessarily have a democratic right to remove such an office bearer in whom they do not have confidence,will not take the matter any further in the wake of express provisions contained in the Regulation of 1994 and the Rules of 1997.”

[Seema Sarkar v. Executive Officer, CIVIL APPEAL NO. OF 2019, Arising out of SLP(Civil) No.36952 of 2017, decided on 01.05.2019]

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Euro Patent Office | Ex-post facto analysis with benefit of hindsight knowledge of invention not a correct approach to decide patent application

Boards of Appeal of the European Patent Office: A Bench of B. Stolz, Chairman and M.R. Vega Laso and J. Geschwind, members allowed the appeal filed against the decision of the Examining Division whereby the appellant’s application for European Patent with the title, “Non-destructive procedure for the isolation of DNA from plants” was rejected.

In the decision under appeal, the Examining Division found that the subject-matter of the claims, then on file, did not involve an inventive step. It may be noted that the appellant replaced the main claims with a set of new claims.

Article 123 of the European Patent Convention (amendment and added matter)

In regard to the new set of claims, the Board held that the amendments did not raise any issue which the board could not reasonably be expected to deal with without adjournment of the oral proceedings. As far as the added matter was concerned, it was held that the subject-matter of the amended claims did not extend beyond the content of the application filed. Thus, Article 123(2) of the Convention was complied with.

Article 56 (inventive step)

The claimed invention related to a method for screening plant populations obtained during plant breeding in order to select desired genetic variants. According to the appellants, their invention reduces the required effort and allows screening of large plant populations with high efficiency. The Board perused document 6 as submitted on record, as the closest state of the art. The document described a protocol for the isolation of high-molecular-weight of DNA from dry roots of medicinal plant Berberis Lycium. After a lengthy discussion on the appellant’s claim, an inventive step over Document 6 read by a skilled person in the light of the common general knowledge in the art was acknowledged. Similarly, taking Document 7 as the closest state of art, it was held that the claimed method involved an inventive step. The approach of the Examining Division was a result of an ex-post facto analysis with the benefit of hindsight knowledge of the invention.

In such view of the matter, the Board directed the Examining Division to grant the patent on the basis of the claims filed as a main request during the oral proceedings and a description to be adapted thereto. [Rijk Zwaan Zaadteelt en Zaadhandel B.V., In re, T 1985/12-3.3.08, dated 13-07-2018]

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Chh HC | Govt. servant cannot make Will of family pension; guiding principles regarding retrial benefits vis-a-vis testamentary disposition recapitulated

Chhattisgarh High Court: Sanjay K. Agrawal, J. has held that a Government servant is not entitled to make a Will of the family pension which is granted in accordance with the service rules.

Vijay Kumar Kaushik, Head Constable in the Police Department, died in harness. He had two wives and children from each of them. After his death, the first wife and her children (petitioners) made an application under Section 372 of the Indian Succession Act, 1925 for grant of Succession Certificate claiming family pension, gratuity, and other benefits. This was opposed by the second wife and her children (respondents) contending that Vijay Kumar had already made a Will in their favour and also nominated them in service records, and therefore the petitioners were not entitled for grant of succession certificate. Petitioner’s application was rejected by the trial court, which decision had been affirmed by the appellate court. Aggrieved thereby, the petitioners filed the present revision petition under Section 388(3) of the 1925 Act.

Shivali Dubey, Advocate appeared for the petitioners; Devesh Chandra Verma, Advocate represented the respondents (second wife and her children); and Hari Agrawal, Advocate appeared as amicus curiae, whose assistance was appreciated by the Court.

Applying the principles laid down by the Supreme Court in Josh Singh v. Union of India, (1980) 4 SCC 306; Violet Isaac v. Union of India, (1991) 1 SCC 725; and Nitu Singh v. Sheela Rani, (2016) 16 SCC 229, the High Court recapitulated the guiding principles of law relating to retiral benefits��vis-a-vis their testamentary disposition:

(i) An employee has no power of testamentary disposition with respect to something which was not payable to him during his lifetime.

(ii) If the qualifying event/benefit occurs only on the death of the deceased while he is in service and due to this, some monetary benefits accrue, it would not form part of the estate of the deceased and the same cannot be disposed by testamentary disposition because there is an element of uncertainty of happening of event.

(iii) If the scheme and/or service rules designate certain persons who are entitled to receive benefits out of the scheme, then no other person except those designated persons can be entitled to the said benefits.

(iv) If the employee makes no contribution to the benefit, he has no control over the same to dispose it by testamentary disposition.

(v) If the scheme/Rules do not provide for nomination of any person during the lifetime of the deceased employee, he has no title to the same and it cannot be disposed by testamentary disposition.

However, it was made clear that the said principles are not exhaustive and the condition laid above are independent of each other and not mutually destructive and in the event of any of the conditions being fulfilled, it cannot be said that testamentary disposition can be made with respect to the said benefit.

In the light of the principles, the Court decided the present revision petition under different heads. The disbursement of the family pension, gratuity and other retirement benefits in the present case were governed by Chhattisgarh Civil Services (Pension) Rules, 1976. As far as family pension was concerned, it was held that same was payable only to the family of a deceased employee, and Petitioner 1 being the legally wedded wife of Vijay Kumar, she was entitled to the entire amount of the said pension. Similarly, ex-gratia amount and police welfare amount were payable only after the death of the employee. As such, they did not form part of the estate of the deceased and thus could not be disposed by way of testamentary disposition. However, the benefits under the heads of gratuity, leave encashment, group insurance scheme, family benefits fund and department provident funds formed part of the estate of the deceased employee and therefore could be disposed by in terms of the Will made by the deceased employee.

Consequently, the petitioners were held entitled to the Succession Certificate with regard to family pension, ex-gratia and police welfare payment. The revision petition was disposed of in such terms. [Samunda Bai v. Kanti Bai, Civil Revision No. 145 of 2016, dated 15-04-2019]

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