Alcohol laws in India

Alcohol is one of the intoxicating substances consumed by the people around the corner of the world. Alcohols laws are in India are not taken seriously and most of the people are not aware of it. There is no uniformity in it and varies from state to state. In it, the legal age for drinking and sale ad consumption of alcohol also includes. It is because the alcohol law is included in Seventh Schedule of the constitution of India and comes under the state list. Therefore, the state can modify the alcohol laws according to their own wish. In India, the sale and consumption of alcohol usually take place in bar, restaurants, pubs, clubs, discos, etc.

The state laws for consumption and sale of alcohol do not only mentions the age of drinking but where all places the liquor should be sold. In few states, even groceries and departmental stores also sell liquor as their state laws permit the same. As being the subject of the state list, the law varies from state to state. Therefore, the legal drinking age differs from state to state in India. There is a difference between consumption age and purchasing age. Consumption age is the age when any individual can legally consume the liquor while the purchasing age is the one when an individual can purchase liquor from the license holder.

Legal Age in different states

In the state of Uttar Pradesh, Sikkim, Karnataka, Goa, Himachal Pradesh and Pondicherry the legal age of drinking is 18, following the state of Andhra Pradesh, Assam, Chhattisgarh, Maharashtra (only beer), Rajasthan, Uttarakhand, Arunachal Pradesh, Bihar, Jammu and Kashmir, Jharkhand, Kerala, Orissa, Tamil Nadu has 21 years and in Punjab, Meghalaya, Haryana, Maharashtra (hard liquor), Chandigarh and Delhi, the minimum age specified is 25. There are few states, where the consumption of alcohol is illegal. They are Gujarat, Manipur, Nagaland and Lakshadweep.

Drunk- Driving Law                             

The drunken drinking law in India is governed by Motor Vehicles Act, 1988. Section 185 of the Act states that if a person while driving a motor vehicle, has a Blood Alcohol Level (BAL) more than 30 mg in terms of 100 ml of blood, the said person shall be for the first time of the offence, be imprisoned for six months, or with fine which may be extend to two thousands, or both. If, the same person commits the offence for the second time within the period of 3 years for the commission of the first offence, the level of punishment increases. The punishment for the same will be imprisonment of two years or with a fine which may extend to three thousand rupees or both.

Public Drinking

Drinking in public places is prohibited as keeping in mind the society in which we live in. but people used to drink in public at a particular concern and secretly have liquor. But when, if caught, has to pay Rs 5000 and if, any nuisance is created by an individual in a drunk mode, then the fine increases to Rs 10,000 with a jail term of three months.

Dry Days

From the calendar year, there are some specific days when the sale of liquor is prohibited and if sold on that particular day, the license of the seller can be cancelled. Republic day (26 January), Independence Day (15 August) and Gandhi Jayanti (2 October) are considered to be the fixed days when the sale of liquor is prohibited throughout India as they are considered as the national holidays. Therefore, these days are considered as Dry day. There are few other days which are to be considered as dry day, according to the state laws for alcohol. These days also vary from state to state.

As mentioned above, the states where the sale of liquor is illegal, these kinds of states are known as Dry State.  In these state, the sale of liquor is totally banned. These states are called liquor-less state and there are separate laws which govern them

Gujarat:  Bombay Prohibition (Gujarat Amendment Bill), 2009 was passed by the governor of Gujarat.

Manipur: by the passing of Manipur Liquor Prohibition Act, 1991, the sale and consumption of liquor is totally banned.

Nagaland:  the sale and consumption of Alcohol was banned by passing Nagaland Liquor Total Prohibition Act (NLTP), 1989

Bihar: the ban on sale and consumption is governed by Bihar Excise (Amendment) Bill, 2016


The price of the alcohol also varies from state to state. Being the cheapest in places like Delhi, Goa, Daman and Diu and expensive in the states like Maharashtra.

Constitutional perspective

Article 47 of the constitution of India states that “State shall Endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health” [1]The constitution allows the state to use the intoxicating substances and drugs for the medical purpose. It prohibits the consumption as these are injurious to health. We have seen that the legal age for consumption, possession and sale of the liquor varies from state to state, but the law not being so abiding and strict, many small children who have not crossed the majority age drinks secretly. The consumption of alcohol is not necessarily for the rich people, but the middle and poor class people also consume to a very higher extent.  This is because the laws are not so strict that people can fear of it and the availability of liquor is so frequent, that even children can purchase it easily.

Intervention of Supreme Court

In the month of December 2016, the apex court of India took an intuitive to control the crimes for drunk driving.  Supreme Court bans the sale of liquor on all national and state highways from 1st April 2017. The court further directed that no shop for the sale of liquor shall be visible from a national or state highway, shall not be situated within the distance of 500 meters from the edge of the highway, all the advertisement for the availability of liquor shall be prohibited.


We all know that alcohol is injuries to health but despite knowing this fact, we, which includes various age groups, tends to have it. The addition of the same leads to various health issues and sometimes, loss of health. So, there is various provision made by every state to take steps towards it. It is essential to cure this issue as nowadays, the youth are driven crazy by alcohol and makes their life addictive to it. This addictiveness leads to various problems. We need to understand that youth are the future of our country and we need to safeguard them by making strict laws for alcohol in India.





Sakshi Jain is currently pursuing her BLS LLB from Government Law College, Mumbai. Although she’s keen to gain knowledge and explore things going around her, her priority always stays focused on law only. Although she yearns for a career in the corporate sector, she’s quite confident regarding her capability to endure in other fields also. A passionate law student and a natural reader, she wants to complete her master degree from Harvard, Oxford, or London University.

Evaluating whether the MFN clause can expand the definitions in the BIT

The Most Favoured Nation (MFN) clause links investment agreements by ensuring that the parties to one treaty provide no less favourable a treatment to a nation than that provided under other treaties in areas covered by the clause.[1] It has often been linked as a tool of equality; however, the general consensus is that the MFN clause obligates a nation only when a treaty clause creates such an obligation.[2]

The debate as to whether the MFN clause can expand the definitions in the BIT and consequently, the scope of application of the treaties is an evolving dialogue in Investment Arbitration.[3] We shall examine the scope of the same through several recent cases. The base issue in each case boils down to a claim being made to invoke the MFN clause in order to expand the definition as per another BIT while the opposition contends that since the definition is not exhaustive and does not specify a particular investment or investor within its folds, it should not be expanded by relying on the MFN as it does not constitute a part of the treatment. In the recent times, the latter view has been upheld by several tribunals as elaborately discussed below.

In Vanessa Ventures Ltd. v. Venezuela, the claimant which was a Canadian Mining Company, sought to expand the definition of ‘investment’ by relying on the MFN clause of the Canada-Venezuela BIT. The company had entered into a concession agreement with the government of Venezuela in order to exploit copper. The dispute boiled down to the company contesting expropriation while Venezuela stated that there existed no qualifying investment as per the BIT due to non compliance with the law of the host state. The Company then attempted to employ the MFN Clause in order to apply the more favourable definition of investment as per the Venezuela- UK BIT, which was devoid of such legality requirements. The Hon’ble court outright rejected the argument and stated that the MFN treatment and protection was applicable as per the BIT only when specified. The Court held-

“The benefit of the MFN provision in Article III of the Canada-Venezuela BIT can only be asserted in respect of investments that are within the scope of Article I(f) of the Canada-Venezuela BIT to begin with. The MFN clause cannot be used to expand the category of investments to which the Canada-Venezuela BIT applies.” [4]

A similar decision was pronounced several years later in the case of Société Générale v. Dominican Republic in which the Claimant similarly sought to expand the definition of ‘investment’ as per the France-Dominican Republic BIT while Dominican Republic had contended that the indirect shareholding of the Claimant does not amount to investment for the purposes of the BIT. The Claimant attempted to invoke the MFN clause to employ the definition under the CFTA. The tribunal refused, by stating that the definition of investment was not exhaustive and the protection is as per the specific treaty-

Each treaty defines what it considers a protected investment and who is entitled to that protection, and definitions can change from treaty to treaty. In this situation, resort to the specific text of the MFN Clause is unnecessary because it applies only to the treatment accorded to such defined investment, but not to the definition of ‘investment’ itself.”[5]

Further, in the case of Metal Tech Limited v. The Republic of Uzbekistan, there was an attempt to circumvent legality requirements by seeking an expanded definition of investment by placing reliance on the MFN clause. The claimant was an Israeli manufacturer who had entered into a joint venture with two Uzbek governments whereby the latter refused to acklowledge the former’s investment as they said it was tainted with illegality. The claimant attempted to use the definition from the Greece-Uzbekistan BIT by relying on the MFN clause but the court refused to expand the definition and held-

“…one must fall within the scope of the treaty, which is in particular circumscribed by the definition of investment and investors, to be entitled to invoke the treaty protections, of which MFN treatment forms part. Or, in fewer words, one must be under the treaty to claim through the treaty.”[6]

As recent as 2013, within the folds of this debate, a new issue arose of distinguishing gateway definitions from admission requirements. In the case of Rafat Ali Rizvi v. The Republic of Indonesia[7], the claimant attempted to rely on the UK-Indonesia BIT in order to seek more favourable treatment for the purposes of admission of investments. Here, while the Claimant agreed that the definition of investment could not be sought to be expanded through the MFN clause, they sought to distinguish it from admission requirements. However, the tribunal held that while not directly definitional, the requirements detailed were conditions of access to treaty protection and had to be satisfied as prerequisites before the protections of the BIT could be invoked such as the MFN clause.

By looking at the above cases, and the contentions that have been raised in several legal forums pertaining to invoking the MFN clause in order to expand definitions, and the holdings of several tribunals, we can establish that “a definition is not a form of treatment; it simply establishes the baseline of what is entitled to MFN treatment.”[8] However, while this is the present status of the debate, whereby protection clauses cannot be invoked such as the MFN before the prerequisites are satisfied, the discussion has yet been stilted to a few definitions only. There is a scope for change if there are further jurisdictional issues raised which are necessary in nature.

In my opinion, the position on expansion of definitions is somewhat settled in reference to the terminology of ‘investors’ and ‘investment’ whereby, they have to be specifically entailed in the basic treaty to be given the meaning and expansion otherwise is not allowed. However, the growing field of investment arbitration is raising questions which might necessitate the expansion of definitions such as for application of jurisdiction.[9] This is also in line with the principle of preventing ‘treaty shopping’ and in line with the MFN clause principle of finding a legal mandate due to specific obligations entailed in the treaty. Further, I believe that the definition in itself does not qualify as treatment, rather is a condition requisite in nature to be fulfilled before seeking benefits.

The process thus needs to be viewed in the light of a cost benefit analysis of the losses of the treaty shopping as compared to the benefits of an extension of substantive protections and should be evaluated and applied where the benefits outweigh the costs.

[1] OECD (2004), “Most-Favoured-Nation Treatment in International Investment Law”, OECD Working Papers on International Investment, 2004/02, OECD Publishing., Article 5, Draft articles on Most-Favoured-nation clauses, Yearbook of the international Law Commission, 1978, Vol. II, Part Two, p. 21.

[2] Oppenheim , International Law (Harlow: R. Jenning & A. Watts, 1992), pp. 1326-1338.

[3]  Louise Barber, “Cart Before the Horse: Can MFN Clauses Expand the Key Definitions in Investment Treaties?,” Kluwer Arbitration Blog, last modified 2014,

[4] Vanessa Ventures Ltd. v. Venezuela, (ICSID Case No ARB(AF)/04/6, Award, 16 January 2013).

[5] Société Générale v. Dominican Republic, (LCIA Case No UN 7927, Award on Preliminary Objections to Jurisdiction, 19 September 2008).

[6] Metal Tech Limited v. The Republic of Uzbekistan, (ICSID Case No. ARB/10/3, Award, 4 October 2013).

[7] Rafat Ali Rizvi v. The Republic of Indonesia, (ICSID Case No. ARB/11/13, Award on Jurisdiction, 16 July 2013).

[8] Metal Tech Limited v. The Republic of Uzbekistan, (ICSID Case No. ARB/10/3, Award, 4 October 2013).

[9] United Nations Organization , “Final Report on the Most Favoured Nation Clause,” United Nations – Office of Legal Affairs, last modified 2009,




Currently pursuing her undergraduate degree from the Gujarat National Law University, Gandhinagar, Sanskriti Sanghi possesses a flair for writing and a yearn to learn. Being avidly interested in Antitrust law, Intellectual Property Rights, Children’s Rights and International Relations, she seeks to engage in and discuss multiple disciplines which keep her constantly discovering. She believes in immersing and involving herself in various activities and letting the passion for each of those interests allow her to deliver her best.

Legal education: From being a Barrister to Wakil to Lawyer

“If we desire respect for the law, we must first make the law respectable.”

– Louis D. Brandeis

Law is a very old prestigious field in the domain of education. Many freedom fighters of the country were from Legal fraternity. Mahatma Gandhi himself was a barrister who studied from South Africa. The first president of India Dr.Rajendra Prasad was himself a lawyer. PanditJawaharlal Nehru, the first prime minister of India was also a barrister. So the kings as well as the king maker were lawyers.  Legal education has seen many ups and downs. There was a time when people were passionate towards this field and many bright students optedit as a career but there were also times when it was taken as an alternative. Judiciary is an independent body. It is known for its fierce attitude and bold decisions. Every citizen has to abide by its decision no matter they are the king or the pauper.  But the question is if law is such a respectable field then: why there is scarcity of good lawyers although courtrooms are filled with lawyers? Why there is less number of judges and there is vacancy for more? Why lawyers are not respected so much and they had to struggle to excel in society? And why the charm of Law was endangered?

Before independence legal education shares a very important place in the history of India. India has produced many renowned lawyers of all time in the field of criminal law. Many renounced lawyers who belong from non-legal field opted law as a profession and excel in it. In those days they were called barristers because they pursue law from abroad from the prestigious universities such as Cambridge, Oxford, Harvard etc. They were seen with respect and honour. With the independence the charm of law slightly got lowered as now the country needed more of the Technocrats than lawyers. Pandit Jawaharlal Nehru emphasised on technocrats, as the free nation needs some repair work which was damaged by the British. There comes an era when engineering gained much more importance and it rose to its prominence. Law was looked to be an alternative choice for the people. Students who were not good in science and quite weak were forced to join law. Slowly a concept of Wakil came. People acquired their degree from any college and start to practice in court having no knowledge at all. Only in a few families law was seen as a respectable career since it was the profession of forefather and a legacy being followed in family. Law is something which needs proper guidance, discipline, clear concept and passion. If one is passionate about law then s/he is unstoppable. The courtrooms of 21st century are going through this phase of lawyers. High Courts are full wakil who don’t even know the jurisdiction as well the clear matter related with the case. Judges scold them and make fun of them. Even many renounced judges and lawyers have said that there is lack of good lawyers in the country. Ram Jetmalani, the renounced and respectable senior advocate of the country has said that hard work is the key to success in law.As a result a need was felt to bring back the lost charm of the law and National Law Universities as well as many Private universities and colleges came into being.It was Prof. N.R MadhavaMenon which changed the outlook of Legal Education and came with 5 years undergraduate course so that students after 12th can pursue this field. A specialised universities concerning with law all over the country came into being. The main idea of coming with NLUs is to give quality students to the country. Even private universities have come forward with such intention. There are private universities which are giving excellent opportunities to the students which are not available even in good NLUs. The concept of moots is evolved to improve the advocacy skills. Moreover there are other extra activities like debates, presentation etc. to build confidence in students.It can be said that the future of law is in safe hands. Earlier there were few NLUs like NLSIU Bangalore, NALSAR Hyderabad etc. but now there are almost 18 universities opened all over the India. Because of NLUs All India entrance exam is conducted known as CLAT and students are enrolled based on merit in various NLUs. Traditionally Legal education in India was conductedthrough the medium of non-specialized universities of India which granted law degree like any other graduated degree. Earlier there were only courtroom lawyers but now many doors are opened for a law student. S/He is not restricted just to courtroom but can opt for jobs in corporate or banking sector or firms.

Law has its own charm and elegance. Law is a synonym for justice and lawyers are the interpreter. A lawyer is a student forever no matter s/he become a judge or works in a corporate sector. It only needs patience and sheer hard work. A little knowledge is a dangerous thing which is true for law. As Martin Luther King, Jr has said “Law and order exist for the purpose of establishing justice and when they fail in this purpose they become the dangerously structured dams that block the flow of social progress.”




It’s always being a difficult task for me to write something about myself but to start with, I am a law student studying in Chanakya National Law University. I love to write the articles based on law and it’s legal aspect. I believe in having a colourful life rather than being black and white. Apart from law, I love drawing especially cartoon characters but I made only for myself that too when I really feel like. I am active in social media quite a lot. I love experimenting such as in the field of making deserts, I love making cakes in the free time. This is my short and sweet bio which is not sufficient to describe myself but at least it can give some idea about me.

Law and Literature

“A society’s law book should, in right and reason, prove, when we open it, far the best and finest work of its whole literature.” – Plato

From the old Greek tragedian Sophocles to Shakespeare, Dickens and present day lawful playwright Grisham, stories about law have intrigued perusers and offered an untouchable’s perspective of the productivity of equity framework. The law and literature development which started in the primary portion of the twentieth century has added to the improvement of the idea of the interdisciplinary association amongst law and literature.Instructed as a comparative course in numerous scholarly settings, the law and literature educational modules was produced by individuals from the scholarly world and the lawful calling who wanted to make law a more humanistic venture.

Some famous and also widely praised artistic works by conspicuous journalists like Shakespeare, Kafka, Dickens, Camus, have managed the subject of law. Practically every watchful peruser would realize that these scholars were affected by the lawful arrangement of their own time and knew about its effect both the individual and social level. It is inappropriate to imagine that they took law as the topic of their novel or play just to recount an intriguing story. Truth be told, through skilful plot improvement their perspectives about the then legitimate framework are communicated. What is most intriguing here is that they were impacted by the law and have unquestionably affected the law too.

Shakespeare’s works contain a surprising amount of law terms and they are utilized precisely. The utilization of lawful language in Hamlet is especially noteworthy. Be that as it may, it is The Merchant of Venice, a disputable story of a Jewish money lender, who inspects topics of equity and the inclination of lawful frameworks.

Dickens’ famous novel Bleak House is especially known for the author’s limit assault on the flaws of the British legal framework. Dickens’ involvement of filling in as a law representative in London proved to be useful in uncovering and delineating the law’s flaws so strikingly. The plot concerns a long-running fight in court that happens between two gatherings guaranteeing the legacy of an extensive property, a fight which at last costs both sides beyond a reasonable doubt. Many trust that Dickens’ unforgiving depiction of the long Chancery framework cleared a path for the changes that occurred in the 1870s.

Tracing the relationship between law and literature we can go back to the period right after U.S. Civil War when law was seen less as a humankind and more as a science, and the exemplary works of Western literature assumed a lesser part in the instruction of individuals from the legitimate calling.

In 1908 the association amongst law and literature was reconsidered by the overwhelming lawful researcher John h. Wigmore, who noticed the predominance of trials and lawful topics in a number of the world’s popular books. In 1925 Justice Benjamin n. Cardozo, of the U.S. Preeminent Court, distributed in the Yale Law Review a noteworthy article titled “Law and Literature,” which analysed the scholarly styles of legal sentiments.

In the 1970s, the thoughts of Wigmore and Cardozo shaped the establishment of the advanced law and literature development. Amid this period law was generally seen as a near-sighted; decide arranged employment that needed fundamental human qualities, for example, sensitivity and sympathy. A developing number of law understudies, lawyers, and judges got to be distinctly disillusioned with the restricted point of view of their calling, and started investigating different fields of learning for edification. In the meantime, secondary teachers, school educators, and graduate understudies started to move from the humanities to the legitimate calling looking for more handy work openings.

Presently numerous conspicuous colleges offer literature courses to law understudies and law courses to literature understudies. Subsequently law understudies and lawyers are better outfitted with talk abilities, while literature understudies and journalists are increasing more aptitude at consolidating law, an essential piece of social life, into literature.

As of late, in the worldwide point of view, law has extended its circle and in the process issues like expulsion, mass slaughtering, atrocities, discretionary power, and unlawful occupations by remote armed forces have gone to the fore. Every one of these issues is the topics of numerous abstract works by various authors, which can help legitimate specialists to discover approaches to consider and manage them. Literature likewise helps in building a superior society by showing the outcomes of perpetrating violations and the horrendous states of a criminal life.

To close, the blending of literature and law can give us any desire for having a lawful framework touched by mankind. It might help authors to create literature with more experience of life and society. In the meantime, we require not overlook that law is a piece of our way of life, not a minor specialized review and it has a great deal to offer to literature too. As literature is a storage facility of option dreams of law and society, the more literature comes into the musings of a lawyer or a law understudy, the better is the possibility of law in a general public paying due respect to human qualities and feelings, a quality which many individuals trust law genuinely needs. In like manner, literature ought to be more worried with the regular issues of life and a genuine impression of society in the wide view. The circumstances request that authors don’t simply extend a progression of non-existent pictures playing in their psyches, and law can genuinely help literature take care of this demand.




Prerna Deep is currently a first-year student at Campus Law Centre, University of Delhi.  She has completed English Honours from Miranda House, DU. Literature gave this forever bibliophile the wings to follow her heart and Law gave her the strength to believe that she too can change the world. She considers receiving an award for her essay on ‘Women and Law in India’ from Mr Ram Jethmalani a treasure. When not writing she’s probably binge-watching sitcoms.  She believes nothing describes her best than Virginia Woolf’s words:
“I have a deeply hidden and inarticulate desire for something beyond the daily life.”

LGBT: An unheard voice

“Our society needs to recognize the unstoppable momentum toward unequivocal civil equality for every gay, lesbian, bisexual and transgendered citizen of this country.”

– Zachary Quinto

Art 14 of The Constitution of India talks about Equality before law that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. But does this article is strictly followed in India? The question remains unanswered especially in the domain of certain section which is thesection of LGBT.They are those sections that are forced not to reveal their true identity. If they reveal their identity then they become the prey of the beasts under the garb of so called humans. In India vulnerable sections include women, children, old people etc. but this section has always been sided. Is this meant that they are not the citizen of the country?

Apart from fighting about the same sex marriage and declaring article 377 unconstitutional there are certain other issues which needs to be dealt. Laws are made for the citizen in order to protect them and provide all kinds of help they needed but this section has always been sided. For instance if a rape is committed on woman then there are provisions of IPC under section 375 but no such provision is there for any LGBT section as a result people of beastly nature take advantage of it and as a result they are forced to live a miserable life and are forced not to reveal their identity. Although Supreme Court has taken a historic step by including the “T” stands for transgender as third gender but does it makes any difference. Still this section struggles or not at all able to avail their rights. For example there is no such provision for them for adoption. This section has always been seen as a downtrodden section and a secretive as well as secluded section. They have to face social as well as legal difficulties in every walk of life. They had to face the difficulties from their childhood where they are mentally harassed and called by different names and even their family members leave them to survive alone in this cruel world. Many a times they are forced to join brothel for their livelihood as commoners despise them and the things sold or touched by them. There is so much disparity in the thinking of the people that they want them (called as Hijara) to visit their house at time of wedding or on the occasion of new born celebration in order to give blessing and it is believed if they curse that is the sign of something bad but at the same time people despise them and treat them worse than an animal. This section is not a new section which has come all of the sudden, from the very early times they exist. Reservation is provided even to those people who do not need it but in the name of castes and for the vote bank no politician questioned it. But this section(LGBT) is in minority so nobody cares it.

This section is fighting for their rights all over the world. Big fame people who excelled in the fields of music, acting, politics etc. didn’t reveal their identity but with the coming years they realised that it is not a crime, it is their identity, their pride, their self-respect which was misused because of orthodox and narrow minded people and so they confronted the world and the world accepted it with open hands. If one consider about section 377 of IPC which deals with unnatural offence, it is true that the whole section cannot be declared as unconstitutional but attraction towards same sex can it be called as an offence? This had been a debatable issue which had been dealt in Naz Foundation vs Government Of Nct Of Delhi And Another[1]where section 377 of IPC was challenged on infringing article 21. The high court declared the section to be unconstitutional however in Suresh Kumar Koushal and another v NAZ Foundation and Others[2]the Supreme Court struck down the decision by the High Court. God has created the universe and human beings. It is the human being which has created the sense of superiority, rules, demarcation and hatred among themselves. People need to broaden their thoughts and minds as they have equal share just like other.People should stand and revolt for the injustice which is meted out against this section as they too are the part of the country as well as society.  It is rightly said by Will Rogers, “We will never have true civilization until we have learned to recognize the rights of others.”So let all the people stand in unity and shout at the top of the voice so that the people sitting at the Apex could hear the pain and sufferings of this section which they are dodging away.

[1]WP(C) No.7455/2001.

[2]CIVIL APPEAL NO.10972  OF 201.




It’s always being a difficult task for me to write something about myself but to start with, I am a law student studying in Chanakya National Law University. I love to write the articles based on law and it’s legal aspect. I believe in having a colourful life rather than being black and white. Apart from law, I love drawing especially cartoon characters but I made only for myself that too when I really feel like. I am active in social media quite a lot. I love experimenting such as in the field of making deserts, I love making cakes in the free time. This is my short and sweet bio which is not sufficient to describe myself but at least it can give some idea about me.

WHEN THE GOING GETS TOUGH: An analysis of claims for Government protection of homegrown companies

As of December, 2016,e-commerce giants such as Flipkart and Ola, which have been led to success at the hands of Indian entrepreneurs, have been seeking government protection from global giants such as Amazon and Uber which have captured a substantial share of the market despite having entered the market post Flipkart & Ola. The claim put forth by these companies is that government policies are required to be oriented towards the development of homegrown companies and that the requirement of the market is only foreign investment for the said purpose and not foreign companies. They have further pointed out that, in their opinions, the market is being distorted by capital and the war is no longer one on innovation.

Flipkart and Ola, as companies, have themselves been criticised for what is being seen as a hypocritical move for protection, due to over 80% of the ownership of these companies resting with overseas investors. However, the argument made by the internet giants is two-fold- that theirs is an India centric approach which aims at attaining high standards within the market while creating high-end jobs in India itself and that the dominance of companies which are managed by and spurred by the ideas of Indians will allow data, security and privacy to continue being retained under Indian control.

Further, and these are the main points for consideration in this article, it has been alleged by both these companies that the global giants, due to having a profitable market base outside of India, find it easier to raise capital which allows them to engage in capital dumping to push Indian players out of the market and secure a monopoly and further this existent capital base allows them to engage in predatory pricing, without the same risks of losses being unsustainable. In this article, we shall be evaluating whether these claims have the capacity to hold ground and broadly whether the government protection sought, has any merit of being considered.

The practice of predatory pricing is one in which the goods or services are priced at such a low rate that other firms cannot compete with such prices and are forced to leave the market. This is the gist of the definition provided in the Competition Act, 2002 as well under S. 4, Explanation (b). It was held in the case of Re: Johnson & Johnson Ltd.[1] that the aim of predatory pricing is to eliminate a rival. It has also been defined as, “where a dominant undertaking incurs losses or foregoes profits in the short term, with the aim of foreclosing its competitors.”[2] These judgements are essential as are the tests explained further below because while the section prohibits pricing at a lower rate, it doesn’t specify which kind, under what circumstances and whether intention is important or not to eliminate.

It is important to understand that allegations of abuse or predatory pricing as punishable shall not withhold if the goods are placed at a lower price due to economies of scale and if their sales being high in general lead to more profit as compared to less profit in a particular place/market.[3] In order to determine whether a company is engaging in pricing of an anti-competitive nature, it becomes important to look at 2 factors primarily- the intention to eliminate rivals from the market and the intention to or the attempt to recoup on such elimination. It has further been held in cases referred to that the practice would be anti-competitive when transitory, with intention of causing competitive injury and being below an appropriate measure of rival costs.[4]

However, where a company is merely reducing the price to survive in the competitive market to increase sales or where the practice indulged in is such so as to counter other similar forces in the market, such practice would not be restrictive or liable to be struck down. Further, in the USA, which judges in India seem to have emulated to an extent with regards to predatory pricing, there is a requirement of stringent conditions and proof of the above factors to prevail in claims of anti-competitive practices.[5]

The test that is laid down by the CCI in India is thus, “before a predatory pricing violation is found, it must be demonstrated that there has been a specific incidence of under-pricing and that the scheme of predatory pricing makes economic sense. The size of Defendant’s market share and the trend may be relevant in determining the ease with which he may drive out a competitor through alleged predatory pricing scheme-but it does not, standing alone, allow a presumption that this can occur. To achieve the recoupment requirement of a predatory pricing claim, a claimant must meet a two-prong test: first, a claimant must demonstrate that the scheme could actually drive the competitor out of the market; second, there must be evidence that the surviving monopolist could then raise prices to consumers long enough to recoup his costs without drawing new entrants to the market.”[6]

However, when these claims are being made, it is for the CCI to be the appropriate forum to be approached to determine whether on the basis of the above there are anti-competitive practices which require to be penalized and not the government to be looked at towards protection in such a scenario on the basis of data and facts presented before them through the established framework of law.

The practice of capital dumping is known as one in which the price charged in a foreign market for a good or service is lower than the price charged in a domestic market for the purpose of seeking an advantageous position in the market of entry. What must be understood is that capital dumping, while condemned under the WTO Agreement, is not prohibited and that when such action causes or threatens to cause material injury to a domestic industry, at most the government of the country concerned can introduce anti-dumping measures in consonance with the guidelines under their anti-dumping agreements which usually results in imposition of extra export duty to bring the price closer to the normal value and reduce the injury to the domestic industry. The foreign companies themselves cannot be ousted on this basis. Further, the FDI regime has been such to promote foreign investment in several sectors such as e-commerce and the investments infuse competition into the market.

Ola and Flipkart are being hypocritical in making such claims of capital dumping due to the nature of these ‘homegrown companies’ being backed by foreign investors who have dumped more capital in India than the counterparts against whom protection has been sought. To draw an analogy, this is almost akin to approaching a forum without clean hands, which is an equitable remedy. This claim is to an extent also baseless due to the copycat path which has been adopted by the companies, in their model, without particular heed to innovating solutions specific to India which makes them more vulnerable to pressure in a competitive environment as at present.

While this is an analysis of the position of law as already exists and the possibilities on the basis of the same applied to the situation of Ola and Flipkart, a recourse that can be taken by the companies, if they have the relevant data to prove their points, is the legal mechanism by approaching the Competition Commission of India which is responsible for adjudging whether any pricing measure has been anti-competitive in nature as mentioned above as well. Even if their claims are not to seek special favours, but rather a level playing field through government measures such as in capital dumping, it needs to be evaluated whether the competition shall be impeded rather than stabilized through such measures in the economy and to what extent these are permissible under international agreements as explained above, and whether it is merely a lack of ability to withstand competition in the market or whether there are anti-competitive practices which need to be penalized.

[1] Re: Johnson & Johnson Ltd., (1988) 64 Comp Cas 394 NULL.

[2] MCX Stock Exchange Ltd v. National Stock Exchange of India Ltd., DotEx International Ltd. and Omnesys Technologies Pvt. Ltd, 2011 CompLR 129 (CCI).

[3] US v. Aluminum Co of America (Alcoa), 148 F.2d 416 (2d Cir. 1945).

[4] Brooke Group Ltd v. Brown and Williamson Tobacco Corporation, 509 US 209 (1993).

[5] Matsushita Electric Indus. Co., Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 1986.

[6] MCX Stock Exchange Ltd v. National Stock Exchange of India Ltd., DotEx International Ltd. and Omnesys Technologies Pvt. Ltd , 2011 Comp LR 0129 (CCI)




Currently pursuing her undergraduate degree from the Gujarat National Law University, Gandhinagar, Sanskriti Sanghi possesses a flair for writing and a yearn to learn. Being avidly interested in Antitrust law, Intellectual Property Rights, Children’s Rights and International Relations, she seeks to engage in and discuss multiple disciplines which keep her constantly discovering. She believes in immersing and involving herself in various activities and letting the passion for each of those interests allow her to deliver her best.